Oral Answers to Questions

WORK AND PENSIONS

The Secretary of State was asked—

Child Poverty

Simon Hughes: What recent assessment he has made of his Department's progress towards its target of halving child poverty by 2010; and if he will make a statement.

Peter Hain: In the past 10 years our policies have helped to lift 600,000 children out of relative poverty. Our new policies announced earlier this year will lift up to 300,000 more children out of poverty.

Simon Hughes: The Secretary of State will have seen the report from the Institute for Public Policy Research only last week which shows that there are still 1.4 million children in households in poverty—the same figure as 10 years ago—and that there are 200,000 more households with children in poverty than there were 10 years ago. Given that failure over 10 years, and the fact that the target date for the Government's goal is only two years hence, what is being done to ensure that the Government target not only those in families with no work, but those who may have someone in the household in work but for whom the benefits reduction means that they are trapped in a position as bad, if not worse, than before?

Peter Hain: As the hon. Gentleman will know, the IPPR report praised what we have done compared with the record of our predecessors—child poverty doubled under the previous Government—but it said that we have to do better. The hon. Gentleman is right to press me on that, and we shall address the issue with couple parents, especially whether it is worth the while of the second parent to work. I remind him of what we are doing in London, which affects his constituents. We are rolling out the in-work credit, which will be increased to £60 for lone parents for the first year to encourage them to go into work. We know that the child of a lone parent out of work is five times more likely to be in poverty than the child of one in work. We are extending child care, and we are making sure that couple parents also have access to the new deal. So we are addressing the issues, especially in London, but we have more work to do. However, we have made massive progress, compared with what we inherited.

Roger Berry: Notwithstanding the Government's significant progress on child poverty, official figures suggest that one in three children living in a household with a disabled adult live in poverty. Figures to be published tomorrow in a new report by Leonard Cheshire Disability suggest that that is a serious underestimate. Does my right hon. Friend agree that ending children poverty will require important measures to tackle the serious poverty faced by millions of disabled people in this country? Unless that is done, we will not achieve our laudable goal of ending child poverty.

Peter Hain: I agree with my hon. Friend, who has championed the rights of disabled people, including children, for many years. Our policies are the right ones, because they will encourage more parents on disability benefit or who have a disabled child to come into work, with the right child care support, in order to make more prosperous futures for themselves. They are not policies designed simply to kick people into work regardless of whether they are disabled or of whether they have a disabled child and appropriate child care available—as the Opposition seem to be spinning. Our policies are the right policies to address child poverty, and that will remain our absolute priority.

James Gray: If the Secretary of State is confident about achieving his targets of first halving and then doing away with child poverty, will he take a leaf out of the book of the Secretary of State for Environment, Food and Rural Affairs, who is putting the carbon reduction target in statute in the Climate Change Bill, which will soon come here from the other place? Will the Secretary of State for Work and Pensions place his target on the statute book with a civil penalty for the Government in the event that they do not achieve it?

Peter Hain: That is a novel suggestion from a Conservative Back Bencher, when the whole Conservative position is against targets. Indeed, they continually castigate us for having targets. [Hon. Members: "Answer."] I will answer the question. We will stick to our policies. Some 600,000 children are already out of poverty and another 300,000 will be lifted out by policies that we have recently announced. More will come as a result of extra reforms that we will announce in the future, and I hope that the hon. Gentleman will support our policies instead of continually opposing them.

Frank Field: May I ask the Secretary of State to make more of the Government's success, given that if a single parent is working 16 hours or more a week neither she nor her children are in poverty? That is an extraordinary achievement. However, we may still have a real problem for many two-parent families who are in work and poor, because the formula does not take account of the second adult in the household. Now that my right hon. Friend has dealt rather successfully with the pensions underpayment, for Allied Steel and Wire, will he put his mind to this issue and similarly win the Prime Minister's support for a change to be made?

Peter Hain: I am grateful to my right hon. Friend for what he said, as often he puts his finger on a serious issue. One thing that we have to address is that it is extremely costly to deal with this issue—extremely costly. We have been seeing whether we can find more innovative and perhaps less costly, more targeted approaches, but we are aware of the question for two-parent families—couple parents—and the disincentive for the second one to work is an issue to be addressed. However, as my right hon. Friend said, we are light years away from the situation we inherited. We would have been in dire circumstances if we had continued the old Conservative policies.

Julia Goldsworthy: Is the Secretary of State aware that the Government will fail to hit their targets on child poverty in the south-west if nothing is done to tackle water bills in the area, which are the highest in the country? Will he ask the child poverty unit to meet to discuss that issue?

Peter Hain: As the hon. Lady knows, with my right hon. Friend the Secretary of State for Children, Schools and Families, I have established a poverty unit, which I assume is the one to which she referred, and we shall certainly consider that issue. I am well aware of the question, and also of the world increase in energy prices, which affects people's incomes. What we need to do is provide more opportunities for people to get into work by removing the barriers, as we are doing in the south-west, where record numbers have come into work and where there are record numbers of vacancies to get people off benefits and into work in the future.

Tony Lloyd: My right hon. Friend will know that my constituency has the unenviable record of the highest levels of child poverty in the country. Does he recognise that in a city such as Manchester, booming though it is, many people are missing out on the boom and that the way into work, particularly for women who head single-parent families, is not just finding jobs but having access to basic education to guarantee that they are equipped for the world of work?

Peter Hain: Yes, I agree. It is not just a question of going into any old job, as some of the rhetoric and spin of Opposition pronouncements suggest. It is a question of providing the right support—which is costly; it costs taxpayers' money to provide that support—including the skills that will make sure that lone parents or couple parents both get a job, as they are increasingly under the Government, and that they keep the job and improve their position in work. That is the way to lift people out of poverty in inner-city areas such as my hon. Friend's constituency.

Chris Grayling: We of course welcome any moves that genuinely tackle child poverty. There is not a single child in this country under 10 years old who was not born under a Labour Government, so may I ask the Secretary of State why the number of those children living in poverty is rising?

Peter Hain: As I have just explained to the House, including the hon. Gentleman, if he looks at what we are doing compared with the policies that would have been implemented if his party had stayed in power, he will see increasing numbers of children coming out of poverty. More and more parents are getting work, with a higher employment rate and a lower benefit level than under the Conservatives. That is the trajectory we are set on, and we are reforming all the time to make sure that we deal with some of the bottlenecks that have been in place for a long time.
	Over the past few days, the hon. Gentleman has been going on about reducing incapacity benefit levels, which are partly responsible for child poverty and poverty generally. The level of incapacity benefit tripled under the Conservatives, as people were smuggled out of jobs and off the jobs count. We are reducing that and we will continue to do so as we get more and more people into work and conquer poverty.

Chris Grayling: The Secretary of State must think he is still on his sun lounger on the beach. He keeps talking about people coming out of child poverty, but the reality is that last year the number of children living in poverty went up. Why after 10 years of Labour government does Britain have a higher proportion of children living in workless households than any other country in Europe?

Peter Hain: Actually, we were lagging well below the average in Europe under the Conservative Government. We are now above the average, but that is not good enough for us and we will do even better. It would be interesting to know how the hon. Gentleman will pay for the policies he advocates. How will he pay for them? At the Tory party conference, he announced, along with his leader—

Mr. Speaker: Order.

Occupational Pensions

Martin Linton: What steps his Department is taking to encourage employers to provide access to an occupational pension scheme for employees.

Mike O'Brien: The Pensions Bill, having its Second Reading today, will introduce a requirement on all employers automatically to enrol workers who are eligible into a qualifying workplace pension scheme. Our estimates indicate that that will result in up to 9 million people newly participating or saving more in workplace schemes, with total pension contributions increasing by up to £10 billion.

Martin Linton: Is not the key to the success of the Government's proposals an obligation on employers to match, or make significant contributions towards, the sum paid by the employee or worker? Is it not that which creates a strong incentive for the employee to save?

Mike O'Brien: My hon. Friend is absolutely right. Under our Bill, employers will for the first time be required to contribute to workers' pensions. The employee will contribute 4 per cent., the employer 3 per cent., and the tax system about 1 per cent. We estimate that more than 1 million workers who are already saving will see their employer's contribution raised as a result, and millions more who have no occupational pension scheme will get the benefit of an employer's contribution. Overall, annual pension contributions from employees and employers are estimated to increase by about £10 billion by 2015.

Oliver Heald: Since 1997, almost 2 million fewer workers are in final salary schemes. How will Ministers ensure that personal accounts do not lead to more employers quitting schemes into which they are paying contributions of 14 per cent., in favour of personal accounts, into which they need pay only 3 per cent.?

Mike O'Brien: The figure that the hon. Gentleman gives is wrong. I understand that it came out last week in a press release from Conservative Front Benchers which was inaccurate. As I understand it, they double-counted the figures. When the BBC did its own research, it realised that the figures that the Conservatives had given out were entirely wrong.
	We need to ensure that there is no levelling down, and that is why in the Pensions Bill we have introduced a number of conditions for personal accounts, which will ensure that people do not transfer in and out of them. There is a restriction of £3,500 on annual contributions. Also, 86 per cent. of employers have indicated to us that they are likely to maintain or increase the contribution that they make to their employees' pension schemes. The Pensions Bill should therefore bring about a significant improvement to the pensions situation.

Lynda Waltho: While I welcome my hon. and learned Friend's statement and the introduction of personal accounts, I am concerned that the proposed banding of contributions will discriminate against part-time workers, many of whom hold more than one part-time job, and most of whom are women. Will he look again at the possibility of allowing employer contributions on all earnings up to the £33,540 ceiling, and also at an option for employee contributions on the first £5,035?

Mike O'Brien: We have had a very broad consultation on those matters, and we looked at the issue of part-time workers—an issue that has caused me great concern. We tried to find a way to assist part-time workers much more effectively. So far, it has proved very difficult to ensure that employers can register what are, in some cases, quite small jobs. We have not been able to find a way around that, but I am open to suggestions on how we might do that. I remain concerned about the issue that my hon. Friend raises.

Graham Stuart: For the new personal accounts to be successful, those on lower than average earnings will need to be persuaded that it is in their interests to invest in the new pensions. If they are not so persuaded, there is a danger that they will opt out, and that the whole system, and the benefits that it is supposed to bring, will collapse. The Pensions Minister himself said today that there was an issue in that respect; what can he say today to allay fears that those on lower than average earnings may opt out, and that the system may be fundamentally weakened?

Mike O'Brien: I can reassure the hon. Gentleman that unlike the previous Conservative Government—who, pound for pound, took away all savings from those who saved, so that they did not benefit—we have introduced a savings credit, which enables those with savings to benefit, even if they are on pension credit. The Pensions Commission has made it clear that people have to save more. For the vast majority, the downsides of not saving outweigh the risk of saving that the hon. Gentleman identifies.
	It is very difficult to predict which people will be in the group that the hon. Gentleman identifies. Those with pension pots of under £16,000 would have the benefit of trivial commutation. Those with pension pots of over £16,000 could get 25 per cent. back, so they would benefit from saving. Some of the suggested solutions are enormously expensive. None of them has been favoured by the hon. Gentleman's party, as far as I am aware, although I heard a rather odd suggestion from the hon. Member for Epsom and Ewell (Chris Grayling) that everyone who made a contribution and did not benefit should have their contributions refunded—a suggestion about which, I suspect, the pensions industry would be very unhappy.

Patricia Hewitt: I warmly welcome what my hon. Friend has done to promote occupational pension schemes, but what reassurance can he offer my constituents who worked, often for many years, for BUSM and contributed to its pension scheme, only to be left high and dry when much of the firm went bankrupt and the remnants were sold on to other firms? Will he meet me to discuss their position?

Mike O'Brien: I would be happy to meet my right hon. Friend. As I understand it, when the business went down, the assets were passed from one company to another, and there are difficulties in getting the trustees to bring together the required information. However, I would be happy to meet my right hon. Friend and see whether there are ways in which we can help. If the company is in the position in which I think it is, the Pension Protection Fund would probably be able to provide help in due course, but I do not want to be categorical about that until I have had a discussion with her.

Nigel Waterson: Did the Minister hear the chief executive of the personal accounts delivery authority on Radio 4 on 29 December, when he declined to commit himself to a 2012 start date for personal accounts? Does he agree that such a delay would be very worrying, and is he totally confident that the scheme will begin on schedule in 2012?

Mike O'Brien: We intend it to begin in 2012, and the chief executive has been informed that that is what we intend.

Local Employment Partnerships

Jim Sheridan: What progress has been made on the implementation of local employment partnerships; and if he will make a statement.

Peter Hain: More and more employers are joining local employment partnerships—around 300 so far—with the number rising each week.

Jim Sheridan: I thank my right hon. Friend for his response. I visited my local job centre in Renfrew, and I was extremely impressed by the staff's commitment to make the system work. What safeguards are in place to address the TUC's concerns that work trials should not be used as a replacement for genuine paid employment?

Peter Hain: I share with my hon. Friend and the TUC the objective that this should not be artificial job substitution. It must lead to a full-time job, and I am grateful to the TUC for the representations it made during the consultation on the Green Paper. Employers offer work trials genuinely to try to fill available vacancies, and the trials often open up full-time jobs for disadvantaged peoples, especially those on benefits. They often last only a few weeks, and we have put in place protections, including not allowing employers to use them to fill short-term vacancies, for which the trade union movement quite properly asked.

Tony Baldry: The test of success or otherwise of local employment partnerships is not the number of employers the Government sign up but the number of people whom those partnerships get back into work. How many people have got back into work so far as a result of local employment partnerships?

Peter Hain: We have only just started, but only last Wednesday I met a company with the Prime Minister in Marylebone jobcentre that recruited 147 people when it opened a retail business. Those people came straight off benefit as a result of the local employment partnership. I have talked to Tesco, which is opening new stores around the country, and is doing exactly the same thing. It sees a win-win situation: employers can get people straight off benefit, and British benefit claimants take up British jobs to become British workers. It is win-win for society, and it is win-win for employers as well, as partnerships have proved to be extremely popular in filling job vacancies. There are about 660,000 job vacancies in Britain, and we want people to come off benefit to fill them. Local employment partnerships will help us to achieve that.

James Clappison: The Secretary of State has just talked about filling job vacancies with British workers. At the same time, the Government propose to reduce the coverage of the resident labour market test, which, as the Secretary of State will know, requires employers to look to UK workers before they can recruit from outside the EU. How does abolishing part of the resident labour market test help British workers to find British jobs?

Peter Hain: The hon. Gentleman should support what we are seeking to do; just about every employer in the land does—the Confederation of British Industry does, as do most employers' organisations. We are seeking to make sure that local employers try to get people off benefits and into work. The issue that the hon. Gentleman raised has nothing to do with that objective. It also contrasts strongly with a policy announced by his party in the past few days—one of "three strikes and you're out". That would reduce the claimant count by less than 0.5 per cent.; it is a typical bit of newspaper spin by a political party that has no real credible policies to offer.

Affordable Credit

John Robertson: What measures his Department has considered to improve access to affordable credit for those in receipt of benefits.

James Plaskitt: To date, more than 150 credit union and community development finance institution outlets delivering the growth fund have made more than 53,000 loans, with a total value exceeding £23 million. The recent allocation of a further £38 million for the period 2008 to 2011 will mean that many tens of thousands more people will gain access to affordable credit.

John Robertson: I thank my hon. Friend for his answer. He will be aware that there are more than 20,000 members of the Glasgow credit union in Glasgow; it is one of our successes. However, there are still 2 million people in the country without a bank account. The Association of British Credit Unions is asking for more calling points throughout the country. Given the planned closures of post offices throughout the country, particularly in Glasgow at this time, access to credit union facilities will be reduced. Will my hon. Friend tell me how we will provide those new points where people can get their money?

James Plaskitt: I am grateful to my hon. Friend for his question. He will understand that the Post Office network needs to be viable; that is why it is undergoing further changes. He will also know that there have been post office branch closures in the past four years; however, during that period, 800,000 more people have gained access to basic banking services. We are well on the way to achieving our target of halving the number of people without access to bank accounts.
	Currently, 11 credit unions offer full banking services and we expect another 20 to do so in the coming year—that will partly be due to the extra support that we are giving them as a result of the growth fund. The additional investment that we have secured for 2008 onwards will achieve a further expansion of the credit union movement, making available more opportunities and access points for affordable loans.

Alistair Burt: Is the Minister not concerned about the implications of the Church of England's recent report "A Matter of Life and Debt"? Some 8 million people in this country have unsecured debts of £10,000 or more, an increase of 30 per cent. in a year. Will not that increased pressure due to debt cause more difficulties for those seeking access to affordable credit and impact most severely on the poorest?

James Plaskitt: No, I do not agree; the problem is the affordability of the credit. If affordable credit is not available to those on very low incomes or benefit—who may, for perfectly good reasons, need credit at some point to deal with expenditure pressures—their alternative is to go to an unaffordable source of credit such as a doorstep lender. Is it better for them to pay interest of 1,000 per cent. on their loan or to take out a much more affordable form of credit from their local credit union? The investment that we are making through the growth fund, in expanding the credit union movement and affordable credit, will help people avoid the kind of debt problem that the hon. Gentleman is talking about.

Ian Lucas: Does my hon. Friend agree that one of the difficulties with local credit unions has been that only some of them have been accessible through post offices? We need a much more organised and strategic approach to the provision of credit via credit unions in local post offices. That would increase footfall in post offices and mean that more people attended them. It would also widen access to credit unions.

James Plaskitt: I entirely understand my hon. Friend's point. He will therefore welcome the fact that part of the investment that we are making through the growth fund is in the physical resources and capacities of credit unions as well as just capitalising their loan books. He will see that the extra investment that we are putting in, in addition to the increased support that we expect to come from the banking sector, will help to create many more points of access at different areas in all the communities across the country, thereby helping again to increase access to affordable credit for many thousands of people.

Jobcentre Plus

Peter Bone: How many complaints were made against Jobcentre Plus in each of the past three years.

Caroline Flint: There were 32,919 complaints in 2005-06, 43,214 in 2006-07, and 26,767 in the year to October 2007. Annually, Jobcentre Plus takes more than 15 million telephone calls, processes more than 3 million new claims and carries out more than 10 million interviews. In that context, complaints represent a small percentage, but we are not complacent and continually seek to improve services and, I hope, to learn from mistakes.

Peter Bone: I am grateful to the Minister for that answer. Over the past few months, I have seen a significant increase in the number of people in my surgery complaining about Jobcentre Plus. Does she agree that the ever-increasing complexity of the benefits system, failures in technology and cuts in front-line service from Jobcentre Plus staff have led to a situation whereby the most vulnerable in our society are receiving a reduced service?

Caroline Flint: The number of complaints in the hon. Gentleman's constituency in 2005-06 was 117, and in 2006-07 it was 24. I will certainly look at any up-to-date information, but I think that that indicates what I said: we take every complaint seriously and there does not seem to have been an explosion in numbers. In his constituency, as elsewhere, whether in Wales, Scotland, England or Northern Ireland, people are being paid benefits more quickly than at any time in recent years. The number of outstanding claims has reduced significantly over the past year. I am pleased to say that today we have a record number of people going into work, and the numbers of people on all the main out-of-work benefits, whether income support, jobseeker's allowance or incapacity benefit, are falling, as are the numbers of new claimants of those benefits. Clearly, in a period of change—certainly over the past 10 years—we have tightened procedures. We expect more people who can work to work; that sometimes creates complaints as well. We take this matter seriously and keep it under a watchful eye.

Andrew Miller: May I congratulate staff in Jobcentre Plus in Ellesmere Port and in Neston, particularly the regional manager, Mr. Mark Wilson, who has done a magnificent job in dealing with the process of change and getting more people back to work in my constituency, with great success? Now that we have a much smaller number of unemployed people, with a core group, some of whom are very difficult to place, will my hon. Friend ensure that the regional structures have sufficient flexibility to allow regional managers to plan to meet the needs of local communities, rather than a one-size-fits-all solution?

Caroline Flint: I thank my hon. Friend for his contribution and for his warm remarks about the services in his local area. We are seeing huge improvements across the Jobcentre Plus service. Anybody who compared walking into a Jobcentre Plus establishment today with doing so 10 or 15 years ago could only comment on how professional, modern and user-friendly it is. Yes, we have looked to centralise benefit delivery services, because we want to make best use of technology and to have better standards of best practice across the piece. That also allows us to consider how face-to-face interactions can better be served, whether in Jobcentre Plus, a children's centre or a community centre. I encourage our regional managers to engage with their local authority partners, employers, the voluntary sector and local communities to see how best that service can be provided, and I hope that we can give them greater flexibility to do just that.

Health and Safety Executive

David Taylor: What recent representations he has received on the staffing levels at the Health and Safety Executive; and if he will make a statement.

Anne McGuire: My colleagues and I have received representations from a range of stakeholders. We have asked the Health and Safety Commission and the Health and Safety Executive to maintain front-line inspector numbers for the next spending period at the March 2008 level.

David Taylor: In the UK last year, 30 million days were lost owing to work-related ill health and 6 million owing to workplace injury. The HSE has a vital economic and social role in driving down those figures. How confident is the Minister that the agency, which has seen staffing levels go down by 25 per cent. since 2002 and is subject to a continual review of procedures and structures, can effectively and efficiently service more remote and rural areas, especially in terms of inspection, enforcement and, where necessary, prosecution of health and safety breaches?

Anne McGuire: I think my hon. Friend's statistics are slightly skew-whiff, if I may put it that way. He has included the 93 railway inspectors who were transferred from the HSE to the railway regulator. He has highlighted an important issue about the number of days lost because of work-related ill health and workplace injury, but I hope he will also accept that in the years from 2000 to 2002, 40 million days were lost in those categories. The figure now sits at 36 million in 2006-07. In 1974, there were 651 fatal injuries to employees. That number was reduced in 2006-07 to 241. We have one of the most sensible and robust health and safety regimes in Europe, partly owing to the efforts of the HSC, the HSE and their colleagues in local authorities. Of course, we should not underestimate the importance of trade unions.

Anne McIntosh: Is the Minister aware that the new provisions of the Clean Neighbourhoods and Environment Act 2005 will come into effect on 6 April? They will implement the provisions on stray dogs and ensure that local authorities will have to find places for kennels. Is the Minister aware that each private kennel will have to be inspected for health and safety before the new provisions can come into effect? Will she assure me that the staffing cuts in the HSE will not have a negative impact on that process of assessment, bearing in mind the tragic incident before Christmas when a lady dog handler was so brutally attacked by a dangerous dog?

Anne McGuire: I think that I would prefer to deliver a far more detailed answer to the hon. Lady in writing, if she will forgive me for that. She has raised some specific issues under this heading.

Tom Levitt: Will my hon. Friend commend the Health and Safety Laboratory, which is part of the HSE, on its increasingly proactive work in preventing the risk of injury and poor health caused by industrial consequences? Will she ensure that nothing is done to jeopardise the effectiveness of that ever more impressive organisation, which is based in my constituency?

Anne McGuire: I am sure that the laboratory will have cognisance of my hon. Friend's comments and commitments. I wish to reinforce the fact that health and safety is an important issue for us all. Not only the HSE but employers and employees create safe workplaces. Those of us who are in such situations need to ensure that we each assume responsibility as our own health and safety officer.

Andrew Selous: Deaths in the construction industry have been running at a comparable level to those suffered by UK armed forces personnel in recent years. Why are front-line construction inspectors being reduced to the March 2008 number that was mentioned by the Minister, and why has there been a 40 per cent. drop in inspections when the death and injury rate is so bad?

Anne McGuire: As I said in my earlier answer, there has been a steady reduction in the number of deaths over the past 15 years, including in the construction industry, although there are some issues about the current set of statistics and we are looking carefully at them. My right hon. Friend the Secretary of State for Work and Pensions held a construction forum to address that rise and to seek a commitment to improvement in those sectors. That work is ongoing with the employers, the trade unions and the HSE. I hope that the hon. Gentleman will recognise that the health and safety inspectors, working alongside those in the industry, will ensure a safer environment for our construction workers.

Allied Steel and Wire

Alun Michael: What progress has been made in providing long-term security for Allied Steel and Wire pensioners.

Peter Hain: On 17 December, I announced a package to make payments to 140,000 individuals so cruelly deprived of their pensions, and I am pleased that unions and campaigners welcome this.

Alun Michael: I congratulate my right hon. Friend on achieving the 90 per cent. figure as the guarantee for pensioners. I thank him and previous Ministers for the many meetings that we have had on the long journey towards a settlement, which seemed impossible at the outset. Will he join me in congratulating the Community trade union on its persistence in fighting for its members' interests? I remind hon. Members that the problem arose as a result of a commercial failure. Can my right hon. Friend assure the House that in future people will not experience the pain that ASW workers and others in the same position suffered for some time?

Peter Hain: I thank my right hon. Friend for his comments and pay tribute to the way in which he campaigned so diligently on behalf of ASW workers, as did many other Cardiff Members and Members throughout the country—140,000 people were affected. Community, formerly the steelworkers' union, played a leading role and deserves tremendous credit for ensuring that the pressure was kept up. As a result, the Government have not only brought justice to the affected workers, but established the Pension Protection Fund, which will stop that sort of thing happening again and ensure that pensioners can feel secure, when they have contributed and saved, as we are all urging them to do, that they will realise in retirement the fruits of those investments.

Michael Penning: Does the Secretary of State agree that one of the reasons that the compensation has been paid, after five years, to the 140,000 pensioners who had their pensions stolen was the work of Ros Altmann, who campaigned for five years with, in my constituency, the teams of former Dexion workers led by Peter and Jackie Humphrey? Without five years of action, the compensation that the pensioners deserve would not have happened. Will the right hon. Gentleman join me in congratulating Ros Altmann and others?

Peter Hain: I happily do so. Ros Altmann played an important part, as did the hon. Gentleman's two constituents, whom I have met. The Dexion workers, like the others, deserve justice. I know that they would have liked it earlier, but we had Andrew Young's report, which identified £1.7 billion of residual assets. We needed to ensure that we acted on that and maximised the best return to protect the pensioners and provide good value for taxpayers' money. We have now achieved the settlement for which the hon. Gentleman's constituents, joined by so many others, rightly campaigned.

Lone Parents

Julie Morgan: What recent steps the Department has taken to support lone parents in finding work; and what plans he has for further assistance.

Caroline Flint: The new deal for lone parents has supported more than 500,000 people into work.
	Our recent document "Ready for Work" sets out how we will expect more lone parents with school age children actively to find work, along with a package of measures to provide lone parents with the skills, confidence and financial support to find and stay in work.

Julie Morgan: I thank the Minister for that reply. The new deal plus pilot project for lone parents in Cardiff and the Vale has been successful in not only getting lone parents into work but sustaining them there. One of the key elements has been benefits such as the £300 in-work benefit, which can help lone parents to stay in a job and assist with, for example, child care, which is many working parents' nightmare. What does my hon. Friend propose to do to extend that sort of benefit more universally?

Caroline Flint: I thank my hon. Friend for her question. The number of lone parents who claim in her constituency has fallen by 39 per cent. since 1997 compared with a national drop of 25 per cent. I therefore give due credit to those who work on the matter locally for her constituents.
	Our plans for our next steps are to roll out nationally the in-work credit from April. We are considering the way in which we extend the right to flexible working for parents of older children. The human resource director of Sainsbury's, Imelda Walsh, has undertaken that review. We are also considering much more closely earlier skills assessment of lone parents—when they come on to income support—regardless of whether they receive jobseeker's allowance or income support. The vacuum in their skills and basic education often inhibits lone parents. Again, we are providing support on several different fronts, but, as I said earlier, from next autumn parents whose youngest child is 12 will be expected to move on to jobseeker's allowance. That is right because it is a something-for-something approach to our welfare system and the right mixture of rights and responsibilities.

Fylde Coast Employees

Ben Wallace: If he will make a statement on the restructuring of his Department's organisation on the Fylde coast.

Anne McGuire: As the hon. Gentleman is aware, the Department is a major employer on the Fylde coast, with more than 5,600 staff in the area. Specific plans for 2008 include moving work and staff from the site at Lytham to Peel park, Blackpool, to move work out of the Pension Service at Blackpool pension centre and to move additional disability and carers service work into Warbreck house in Blackpool.

Ben Wallace: Many of my constituents currently work for the Child Support Agency, and they are in the process of transferring across to the Child Maintenance and Enforcement Commission. One of the things that worries them is why the new body needs to be non-departmental. On 2 November, I wrote to Lord McKenzie of Luton, who is a Minister in the Department, to ask him why that is the case. I received his reply just before Christmas, which stated:
	"It is essential that we mark a clean break with the failures of the past and give the Commission a better platform for success"
	by removing it from the Department. Does the Minister agree with Lord McKenzie that the Department is viewed as such a failure that the CSA's replacement must be operated from outwith it, and what confidence does that give my constituents?

Anne McGuire: I have to say that the hon. Gentleman suffers from selective amnesia, because he has forgotten that the foundation stone of the Child Support Agency was laid by a Conservative Government. Obviously, I have not seen the specific details of the letter to which he has alluded, but if it was written by my noble Friend Lord McKenzie, I am sure that I agree with it.

Topical Questions

Lynne Jones: If he will make a statement on his departmental responsibilities.

Peter Hain: Last week, we celebrated 10 years of the new deal, through which more than 1.8 million people have found jobs, which is one person every three minutes every single day. An 80 per cent. employment rate is now within our grasp as we move to the next phase of radical welfare reform, which will see hundreds of thousands more benefit claimants becoming active jobseekers rather than passive recipients. Our imperative is to get as many people off benefits and into work as possible, because that is the way to a better life for them and their families. Our policy is fair, coherent, costed and workable, which is exactly the opposite of Conservative policy. The Conservatives have been left desperately plagiarising our plans, because if one looks beneath the spin, they have no new credible policy ideas.

Lynne Jones: I congratulate my right hon. Friend on his good work, but one matter still requires his attention. Did he read the article in the weekend press about Ruby Gassor, who worked all her life but paid only a married woman's national insurance contribution in the early years? She will receive only £7 in basic state pension, whereas her friend who stayed at home to bring up children benefited from home responsibilities protection and will receive £83 a week when she is 60. Will my right hon. Friend attend to that important matter?

Mike O'Brien: We will certainly address the issues around ensuring that women can claim the pensions that they deserve. In 2007, we introduced legislation that will ensure that 75 per cent. of women can claim a basic state pension after 2010. We hope that, by 2025, 90 per cent. of women—the figure for men is about the same—can claim a full basic state pension. We are taking serious account of those issues, and I am also happy to discuss with my hon. Friend the wider issues that she has raised.

Ann Winterton: Bearing in mind the alacrity with which the Government acted last year in bailing out Northern Rock with billions of pounds of taxpayers' money, is it any wonder that pensioners in my constituency who lost pensions through no fault of their own agree with Ros Altmann of the Pensions Action Group? She said that
	"the continued delay in settling the pension wind-up scandal is totally inexcusable".

Peter Hain: But Ros Altmann has just welcomed the announcement that I made before Christmas, which established that compensation would be paid to those 140,000 workers. I would have thought that the hon. Lady welcomed that.
	As regards Northern Rock, the guarantees that the Government provided are nothing like the burden on the taxpayer that the hon. Lady suggests. It is a matter of ensuring that our financial institutions are not affected by the global financial turbulence that infected Northern Rock, and which spread and infected financial institutions more widely. Any Government who had not acted in such a decisive way would have been regarded as thoroughly irresponsible.

Anne Begg: Pensioners who were previously workers at the Richards Textiles factory in Aberdeen are very pleased with the announcement that the financial assistance scheme will be brought up to the 90 per cent. level. That announcement was made just before Christmas, and judging by the last question, some people may have missed it. Will my right hon. Friend outline the time scales involved in making payments to pensioners who have lost out in the past?

Peter Hain: One of the things we will need is parliamentary support for the necessary legislative changes—including the Pensions Bill, the Second Reading of which I am about to move—and other changes to regulations, to allow us to implement the announcements that I made. The hon. Lady's constituents, along with the rest of the 140,000 people involved, can then get the early justice that they deserve. I hope that every Member of this House will support us in making those changes and that they will support the Second Reading of the Bill this afternoon so that we can make rapid progress with the scheme's implementation.

Peter Bone: Today more than 1 million extra people are facing retirement without a pension from their employer compared with the situation when the Government came to power. Why?

Mike O'Brien: It is the case that a large number of people have not seen the full benefit of their pension. There are various reasons for that. First, over a period of time, there were things such as pensions holidays, which were approved by the previous Conservative Government. There was also the pensions mis-selling scandal, which happened under the previous Conservative Government, and there was the ineffectual Pensions Act 1995, which, as the hon. Gentleman might remember, was passed under the previous Conservative Government.
	It is the case, however, that this Government have done something about the situation. We have introduced the Pension Protection Fund; we have dealt with the issue of the 140,000 people who had lost their pensions between 1997 and 2004; and we have also introduced a pensions regulator, who is in a position to ensure that the basis of the running of the pensions system is far better than it ever has been. Those are major social reforms. They have happened quietly, but they mean a big change, and an important one.

Tim Boswell: In the context of yet another announcement regarding an initiative to deal with incapacity benefit—not the first during the past 10 years, I am afraid—will Ministers please ensure that they pay particular attention to the remarkable situation of the estimated 100,000 young people with mental health or related motivation problems? Otherwise, those young people will be condemned to a lifetime of joblessness and demotivation.

Peter Hain: I agree very much with what the hon. Gentleman says. His record of campaigning on those matters is exemplary, and I pay tribute to him. However, questions should be asked in other directions in the House about whether the "three strikes and you're out" policy will benefit the 100,000 young people he describes, or whether those people need the support of £170 million of psychological therapy that we will provide during the coming period to ensure that they get the specialist support, counselling and therapy they need to make sure that they can get into work. That is what we are doing: introducing practical, deliverable policies, not spin and hype.

David Winnick: One of my constituents, who is in his 70s, unfortunately had to have his leg amputated. He applied for attendance allowance, which was agreed to, but he was told that there would be a delay of four months owing to policy. Why is there such a delay? I will write to the Secretary of State, but I would like an explanation now.

Anne McGuire: I thank my hon. Friend for his question. I would need to ask him for further details and would be delighted to meet him as quickly as he wants, because there is no policy reason why any application for attendance allowance should be delayed. Indeed, we are turning round attendance allowance applications, subject to entitlement and so on, within the target time. I therefore do not understand why there is a particular problem in his constituency, although I would be delighted to look at it.

Andrew Rosindell: I am sure that the Secretary of State will be aware that since 2000 his Department has spent a total of £1.6 billion on failed IT schemes, namely the benefit card, the upgrade to the Child Support Agency's computer system and the unsuccessful streamlining of the benefits payment system. How can he justify such a dreadful waste of public money?

Peter Hain: There is no question but that IT projects have had problems in both the public and private sectors, with a much higher failure rate than they should have. That is why we have put in place the necessary procedures to try to ensure that we avoid that in future, that we secure value for money from all our IT projects and that we continue to achieve record levels of delivery in terms of getting people into work, assisting them with pensions queries and delivering all the other services that my Department provides.

Danny Alexander: Millions of pensioners and other claimants rely on post offices to collect their pensions and benefits every week. As Government-inspired post office closures are rolled out across the country, will the Secretary of State reassure those pensioners and other claimants that they will continue to be able to collect their benefits through the Post Office card account—run by the Post Office, not some other organisation—and that further post office closures will not be inspired by a loss of income?

Peter Hain: These are not Government-inspired closures. We are putting in hundreds of millions of pounds of support for local post offices, amounting over the period to billions of pounds. Because of many reasons related to lifestyle, people's personal shopping habits and their use of local post offices have changed. People are not supporting their local post offices in the way that I, the hon. Gentleman and perhaps every Member of the House would like. That has created circumstances in which post offices have closed, as they closed in previous decades under the last Government, but we will ensure that everybody will receive the proper service that they need, especially the most vulnerable pensioners and others who depend on the benefits system.

David Kidney: Pensioner constituents are already contacting me to express their anger and fear at last week's announcement by npower of huge increases in fuel bills. Will the Secretary of State call on Ofgem to look into those increases, and will consideration now be given to implementing the proposal for a compulsory social tariff for all vulnerable customers of big energy companies?

Mike O'Brien: As my hon. Friend knows, the Government do not normally intervene in the energy market, but in this case Ministers are naturally concerned about the effects that price rises such as those announced by npower can have on vulnerable customers. The Treasury will seek the views of Ofgem on developments that have taken place in the energy market, to see whether such changes as have been announced can possibly be justified. However, the Government are committed to tackling fuel poverty. Winter fuel payments, which last winter helped more than 11 million older people with their fuel bills, and assistance for 2 million low-income households so far, through schemes to improve energy efficiency, are examples of how we have practically sought to help older people in particular to deal with increasing fuel prices.

Michael Penning: On 11 December 2005, the Buncefield explosion destroyed a large area in my community. The Health and Safety Executive inquiry has gone on for nearly two years. Will the Minister inform the House when it is likely to conclude and say whether it is true that the oil companies are paying for it, not the British taxpayer? If they are, there would seem to be a conflict of interest, considering that they were responsible for the explosion.

James Plaskitt: I am aware that the hon. Gentleman and many of his constituents take a close interest in the matter. He and I have already discussed it in debates in the House. As he knows, the decision to investigate the causes of the explosion was made through a major incident investigation board headed by Lord Newton, and we believe that that is the quickest way of finding out exactly what happened.
	As I think the hon. Gentleman will understand in view of the complexity of the issues involved, the investigation is still in progress. At this point, the Health and Safety Executive cannot say when a decision will be made on prosecutions. Such a decision is for the HSE and the Environment Agency and not for the investigating board. Until the investigation is completed we cannot say more about it, but it is important for it to continue. As the hon. Gentleman knows, interim reports have been issued and a good deal of information is already available to him and to his constituents. We expect the investigation to be concluded shortly.

Jim Devine: I do not know whether my hon. Friend has had a chance to read the excellent report prepared by the Scottish Affairs Committee and released before the Christmas recess. It drew attention to interest rates charged by not only illegal but legal moneylenders. One company was charging about 177 per cent. Is any consideration being given to capping interest rates in the so-called legal market?

James Plaskitt: I understand my hon. Friend's deep concern, but there is a problem with capping the rates, which might have adverse effects on the availability of affordable credit. I think that our best response to the need to release people from the burden of interest rates at such levels—or, indeed, even higher levels in the case of illegal doorstep lending—is to pursue the policies that we have, financed through the growth fund, to make much more affordable credit available through credit unions and other not-for-profit financial lenders.
	As my hon. Friend will know, we have already made a significant investment, and there will be further investment over the next spending round. As a result, tens of thousands of people are gaining access to affordable credit, thus avoiding the problems to which he has rightly drawn attention.

Nicholas Winterton: Will the Government address the bias of the benefits system against two-parent families?

Peter Hain: I have already addressed it. As I have said, we are investigating the methods that are most cost-effective to the hon. Gentleman's constituents, as taxpayers, and to the rest of us. The truth is, however, that there are more jobs than ever before under this Government, that poverty has been reduced under this Government, and that there is more prosperity and wealth in the country under this Government. The hon. Gentleman ought to applaud that.

Pakistan and Kenya

David Miliband: With permission, Mr. Speaker, I shall make a statement about recent developments in Pakistan and Kenya. I am grateful to you for allowing me to combine the two statements. Both countries are important to Britain, and rightly important to many hon. Members. I know that the Foreign Affairs Committee visited Pakistan in November 2006, and that it was a key focus of the Committee's report on foreign policy aspects of the war on terror in July 2006 and its subsequent report on South Asia in May 2007. I think I am right in saying that several hon. Members are now returning from Pakistan, having gone there to observe the elections that were planned for next week, and will now try to rearrange their visit.
	The situations in Pakistan and Kenya are very different, and I shall deal with them separately, but important elements are common to the recent crises that have afflicted both those regional powers. Both countries have experienced strong economic growth in recent years and the middle class is growing, but poverty is widespread and rising inequality is causing frustration and disillusionment. Both countries face violence and terrorism, and both are undergoing political transition. They are working to embed democratic systems and structures, but struggling to overcome the tribal or dynastic allegiances which have fed personality politics.
	In these circumstances, there is a temptation to turn away. However, there are 800,000 British people of Pakistani origin; there are an estimated 13,000 British citizens resident in Kenya, and over a quarter of a million British tourists visit each year. The United Kingdom is Kenya's largest foreign investor, and our bilateral trade with Pakistan is worth some £1 billion; and, of course, both Pakistan and Kenya are key partners in the fight against al-Qaeda. That is why the Government are committed to using all their assets to help those countries on the path to peaceful and prosperous development.
	I will begin with Pakistan. I am sure the whole House will want to join me in reiterating our condolences to the family of Mrs. Bhutto at this terrible time and to the other bereaved Pakistani families who are grieving for loved ones who were killed or who suffered injuries in the senseless attack of 27 December. There is cross-party condemnation in this House of terrorism and a determination to stand with the people of Pakistan against the power of the bomb and the bullet, and I welcome that.
	Whatever the disputes about her periods in office, Benazir Bhutto showed in her words and actions a deep commitment to her country. She knew the risks of her return to campaign for election but was convinced that her country needed her. The target of her assassins are all those committed to democracy in Pakistan and it is vital that they do not succeed. The courage shown by Mrs. Bhutto is now required of others as they take forward the drive for democracy and modernisation.
	The Government's aims and role are fourfold. The first priority is to ensure that the circumstances of Mrs. Bhutto's death are properly established. A five-member UK police team arrived in Pakistan at the end of last week and has begun work in support of Pakistani colleagues.
	The second priority is to promote free and fair elections. The delay in the elections as a result of the assassination is regrettable but the period between now and 18 February needs to be used to build confidence in the democratic process. When I spoke to the House on 7 November, I made clear my conviction that democracy and the rule of law were allies of stability and development in Pakistan. Since then, President Musharraf has retired from the military. He has lifted the state of emergency. Almost all political prisoners have been released and most media restrictions have been rescinded. But more needs to be done, and we have continued to stress the Pakistani Government's responsibility to create a level playing field under which credible and transparent elections can take place. This means that all remaining political detainees need to be released and the remaining restrictions on the media must be lifted.
	In my last telephone call with Mrs. Bhutto on 9 December, I pledged that the UK would work on the details of the election process. In recent days, the Prime Minister has discussed the elections on three separate occasions with President Musharraf. I have also spoken to interim Pakistani Foreign Minister ul-Haque. We continue to call on the Government of Pakistan to improve the prospects for credible elections, particularly by increasing transparency, both now and on election day itself. This includes setting out clearly and early where all of the approximately 54,000 polling stations will be, posting the results for each station publicly immediately after the count and ensuring that the media's ability to report is untrammelled.
	I am glad that the EU is now working to put together a full-scale election observation mission. I understand that the American International Republican Institute mission may also be reinstated. I believe that the Commonwealth can make an important, positive contribution and I hope that Pakistan will decide to invite an observer mission.
	Our third priority is further to improve counter-terrorism co-operation. The deadly attack on Benazir Bhutto shows terrorism to be a threat to Pakistan, not just to the west. Over the last year, hundreds of innocent civilians have been killed in shootings and suicide bomb attacks in that country. We have reiterated the UK Government's commitment to build on the already significant counter-terrorism support that we provide to Pakistan. A team of cross-Government UK experts will travel to Pakistan next week for further consultations. This will be a precursor to a further British visit to deepen our counter-terrorism relationship.
	Fourthly, we are determined to ensure that British citizens of Pakistani heritage and Pakistanis resident in the United Kingdom are informed about developments and engaged in the drive to build a decent society in Pakistan. I met some of their community leaders earlier today. Although the next five weeks are important, so are the next five years and beyond, and economic, social and political development in Pakistan need to proceed hand in hand, with international support.
	Kenya provided the second crisis of the new year break. When President Kibaki won the presidency in 2002, it was hailed as the most free and fair election Kenya had seen. Daniel Arap Moi's party accepted the result and ceded power. Tribal and ethnic divisions were overcome as the population rallied behind the new Government. It was a moment of great optimism. It is a marked contrast with the situation that has unfolded since the election on 27 December. I know I speak for the entire House in condemning the appalling post-election violence in Kenya, particularly the brutal killing of Kikuyu women and children in the church near Eldoret on 1 January.
	Let me deal with the three issues that have preoccupied the Government and indeed the whole international community over the last week: violence and the resulting humanitarian crisis; the elections; and mediation. I have arranged for the nine statements put out by myself, the Prime Minister and the Secretary of State for International Development over the last week to be deposited in a single file in the Library. I have spoken to our high commissioner in the last hour and I can confirm that his view is that of the media reports: that the urban violence of the middle of last week has subsided. That is obviously welcome, but the reporting from rural areas suggests that there are up to 250,000 refugees, and there is the potential for violence to erupt again. That is why since 2 January our travel advice, along with other countries', has advised against non-essential travel to Kenya. That advice will remain in place until the security and political situation is clarified. We are advising Britons in Kenya to exercise extreme caution, to remain indoors in the affected areas, and to seek local advice, from the tour operators or local authorities, if they need to travel.
	The humanitarian crisis we have seen unfolding on our television screens is due entirely to the post-election violence. The UN, World Food Programme and Red Cross are leading the international effort. The Department for International Development is monitoring the situation closely and has had a team on the ground in western Kenya. A £1 million contribution to the Red Cross was announced by my right hon. Friend the Secretary of State for International Development last week, and it has helped to provide shelter for those displaced and to facilitate major food shipments from Mombasa, which took place over the weekend. DFID stands ready to provide more assistance if it is needed.
	In respect of the election itself, millions of Kenyans queued for hours, peacefully and with dignity, to cast their votes for parliamentary and presidential candidates after a relatively calm election campaign. It is vital not just for Kenya, but for the whole of Africa with important elections over the next 18 months, that the democratic process works and is seen to work. However, the counting of votes in the presidential election, and particularly the reporting of votes from local to regional and then national centres, has, according to reliable European Union observation, been plagued by irregularity. Those irregularities stand in the way of the formation of a stable Kenyan Government who would have the confidence of their own people and the international community.
	All allegations of fraud need to be investigated and the perpetrators brought to justice. That requires due legal process, but there is also a need for political mediation. Individual acts of fraud are reprehensible, but there is a deeper issue. Whatever the actual result, the country was deeply split. Kenya needs the diversity of its views to be respected, but the presidential system is designed to concentrate power when Kenya's immediate and medium-term future requires the sharing of power.
	Kenya's political leaders must be willing to make the necessary compromises to find a way forward. They are more likely to do so with external help. That is why at the heart of all our conversations—with Kenyan, African, EU, Commonwealth, US and UN partners—has been the need for a credible mediation process. I am pleased that President Kufuor of Ghana, the current chairman of the African Union, is due to arrive in Kenya soon, and he will do so with our full support. He needs Kenyan leaders ready to engage. On 2 January Condoleezza Rice and I called for a "spirit of compromise" from those leaders. If they fail to compromise, they will forfeit the confidence, good will and support of their own people and the international community. The stakes are high for the Kenyan people, and we will remain fully engaged on the political and consular track.
	May I conclude by thanking staff in the Foreign Office and the Department for International Development, in-country and in London, for their outstanding consular and political work around the clock in the very trying circumstances of the last 10 days? Their work is far from done, but both countries are better off for their engagement, and they deserve the thanks of the House.

William Hague: I thank the Foreign Secretary for taking the earliest opportunity to make a statement on the situation in these two countries, as we requested last week. In both cases a flawed democratic process has given rise to tragedy, but in both cases democratically elected leaders and democratically enshrined institutions are the best hope for overcoming extremism, instability and corruption.
	I echo what the Foreign Secretary said about the horror with which we have greeted the butchery of innocent people, including children, in the aftermath of the Kenyan elections. The result of that ethnic strife in the case of Kenya is a humanitarian tragedy, and providing urgent assistance to the 250,000 displaced both within Kenya and across its borders must be at the forefront of our concerns. On that subject, the Conservatives welcome DFID's contribution of £1 million to the Kenyan Red Cross. Will the Foreign Secretary tell the House what is his latest assessment of the relief effort? How is that being evaluated? Given that the medical charity Merlin yesterday warned that Kenya faces a health crisis "within days" as "dangerously low" supplies of food and water are putting many people at risk of infection and dehydration, is it likely that international aid will need to be increased?
	Is the Foreign Secretary confident that aid convoys are able to move freely and to reach those most in need, and that they themselves will not be vulnerable to attack? What representations have been made to the Government of Kenya about the need to protect and safeguard the people driven from their homes, and does he have any information about the number of refugees now in neighbouring countries such as Uganda, and the extent of their needs?
	On the political crisis in Kenya, can the Foreign Secretary say more about the role that British officials and Ministers are playing? Are there any plans for any member of the Government to visit Kenya? Like him, we fully support the mission of the President of Ghana. It has been reported that the US Assistant Secretary of State has secured an offer from President Kibaki to form a coalition Government, and a concession from the Opposition leader that he will negotiate without preconditions. Can the Foreign Secretary confirm those reports? Is it not important that the EU monitoring mission issue a formal public report on the elections as soon as possible? Is the Foreign Secretary aware of any findings or recommendations from that mission, or from the Kenyan electoral assistance programme that Britain helped to fund?
	Ethnic conflict is now threatening the decades of stability that have set Kenya apart from so many of its neighbours. In this situation, Kenya's leaders have a clear responsibility to compromise and work together—whether this means joint rule or an eventual rerun of the elections under international supervision. Is it the Foreign Secretary's view that a recount or re-tally of the election is not practical, given the likely destruction of ballot papers and records, and will he assure the House that he will not entertain the idea of sanctions at present, as some have suggested? Kenya is not a country hostile to Britain's national interest, but a friendly country that needs our assistance.
	I turn to Pakistan—a major ally, as the Foreign Secretary has said, in the war on international terror and another friend with whom we have immensely strong links and a united view that the demands that this country has made for the lifting of the remaining aspects of the state of emergency are wholly justified. The whole House will agree that the assassination of Benazir Bhutto is a sickening and appalling crime and that such violence is a major threat to the stability and future of Pakistan. This was aimed not only at her, but at democracy in Pakistan itself.
	The Foreign Secretary referred to the team of detectives sent to help with the investigation; can he say what their precise remit is? It is vital that when the elections are held, international monitors have full access, that the elections are free and fair, that restrictions on press and broadcasting are lifted and that the results are respected. The Foreign Secretary said in November that a decision would be made about some £3.5 million of UK funding for the elections on the basis of the conduct of the Government of Pakistan. Can he say now whether any decisions have been reached about that? Is he confident that a robust election monitoring mission will be accepted by the Government of Pakistan, and that it will have all the access that it needs to the electoral process?
	The Foreign Secretary also said in November that no
	"spillover of the situation in Pakistan"—[ Official Report, 7 November 2007; Vol. 467, c. 134.]
	into Afghanistan had been detected at that time. However, the outgoing UN special representative said last week that violence in Pakistan was affecting Afghanistan, and there are reports today of thousands of Pakistanis fleeing their tribal areas into Afghanistan. What is the Foreign Secretary's latest assessment of that, and does it have any implications for our troops and their operations in Afghanistan?
	Finally, once a way has been found through the present crises in both countries, is it not our responsibility to help guide both toward a secure democratic future? Will that not require a reduction in corruption, a free press and an independent judiciary, so that disputes can be settled through reason and law, rather than through violence and death?

David Miliband: I am grateful to the right hon. Gentleman for the content and tone of his remarks. We wholeheartedly support his identification of the need in both Kenya and Pakistan for democratic institutions that are not just those of formal democracy, but which are supported through the judiciary, the media and political parties—never mind education, health and other systems.
	The right hon. Gentleman asked about aid, and I am sure that he will recognise that, importantly, the aid and security questions are two sides of the same coin. Yesterday, the food convoy from Mombasa did get through to western Kenya without alarm or difficulty. That is obviously encouraging, but we will follow the situation very carefully. The ongoing assessment to which he referred is made partly by our staff or by DFID staff on the ground, working closely with the high commission in Nairobi. I am happy to keep the House informed on that basis.
	The right hon. Gentleman asked about the nature of the power-sharing arrangements that could come into play. A balance needs to be struck, because it is for the Kenyans to decide the nature of their power sharing, not for us to prescribe a particular type of coalition Government or constitutional arrangement. He reiterated the word that I use, "compromise". It relates to compromise between the two main political parties, and it is important to stress that clearly. Of course, Kenya has a history of so-called "Governments of national unity". It had such a Government in 2002, which did not lead to the sort of power sharing that is needed. I hope that he will understand my saying that at this stage we do not want to prescribe a particular type of constitutional or other reform, but we will all know it when we see it: when a Government reflects the divided will of the Kenyan people in respect of the political parties for which they voted.
	The head of the EU mission has returned to Brussels, but the deputy head has rightly stayed in-country, so that he can brief President Kufuor and others as they come through. I shall find out for the right hon. Gentleman the formal timing of the write-up from the head of the EU mission, but it will, in part, want to reflect the ongoing investigations.
	The right hon. Gentleman is right to say that there are significant obstacles to a full-scale recount. Some people have called for a rerun of the elections, others for a recount or re-tally, and I was careful to refer in my statement to the problems beyond the individual ballot stations as the results were referred onwards. What is important is that any allegations of irregularities are properly followed through—it would be wrong to sweep them under the carpet. I know that that is not what he was suggesting, but the first priority was to stop the violence.
	The second priority is to get some sort of political mediation under way. The investigation of the irregularities and the possibility of a further future election obviously will be discussed by the parties. I am happy to confirm to the right hon. Gentleman that the £50 million that we are spending through DFID for the benefit of the Kenyan people, which will be spent on bed nets and other essential development assets, will not be harmed as a result of this process.
	In light of the forthcoming debut of the Liberal Democrats' new foreign affairs spokesman, the hon. Member for Kingston and Surbiton (Mr. Davey), perhaps I shall not condemn him until he condemns us, and then we can return —[Interruption.] He says that I will not be disappointed, so I shall save my best volleys until later.
	On Pakistan, I was told as I left the office today that there had been agreement on the terms of reference of the Scotland Yard mission to support the Pakistani authorities, and I would certainly like them to be published. Secondly, in respect of the UK funding, which was to support democratic processes, they are as important as ever, and although we keep that funding under review, no decision has been taken to terminate it.
	In respect of Afghanistan, I have heard the media reports that were mentioned. The right hon. Member for Richmond, Yorks (Mr. Hague) asked for our latest assessment. Our latest assessment on the situation in the federally administered areas is not a new one—it is that the lack of political integration between the federally administered areas in Pakistan and the rest of the country is a threat to the integrity and stability of not only Pakistan, but Afghanistan. I have received no reports of it being an immediate threat to our troops, but the sort of instability to which he refers provides a haven for some of those who are attacking our troops and is a real concern for us. I discussed it when I was in Helmand, and I guess that he and his colleagues have discussed it with people there too.
	The right hon. Gentleman rightly raised the issue of corruption. He will know that none of the money in our bilateral aid is put through the Kenyan Government. We put the money through non-governmental organisations and other organisations precisely to ensure that it reaches the targets for which it is intended. Good government is an essential part of the sort of democratic process in which he and I believe, and it is certainly something that we are working to achieve.

Hugh Bayley: Kenya needs democracy, not a political fix, because democracy is the way to make leaders accountable to the people. Does the Foreign Secretary share my concern about the statement from the chair of the electoral commission of Kenya that his announcement of President Kibaki's win was made under duress? Will the Government continue to fund work to strengthen political institutions and parties in Kenya in order to reinforce their commitment to democracy and the rule of law, and their ability to resist anti-democratic pressures wherever they may come from?

David Miliband: I am happy to confirm that to my hon. Friend, who speaks with authority on these issues from his long interest in them. His reference to strengthening parliamentary links is important. The role of political parties needs to be developed, and that is something to which hon. Members and colleagues in the other place can contribute.

Edward Davey: I thank the Foreign Secretary for his statement and associate my right hon. and hon. Friends on the Liberal Democrat Benches with both his tribute to Benazir Bhutto and his sadness at the violent deaths of so many others in the recent crises in Pakistan and Kenya. Benazir Bhutto was a politician of great courage. She put her life on the line for the restoration of democracy in Pakistan and her death presents the world with the nightmare of an unstable, divided Pakistan.
	The Foreign Secretary has described well why we should all be alarmed at recent events in those two countries and the urgent need to restore law and order through democratic means. I pay tribute to his efforts and those of the Prime Minister and many British diplomats in these difficult and often frustrating days. May I say how strongly we agree with much of what the Foreign Secretary has said today—for example, about the decision to send Scotland Yard detectives to assist the investigation into Miss Bhutto's murder and the humanitarian aid through the Red Cross for parts of Kenya cut off by the violence?
	None the less, there remain some serious questions about the judgments made by Britain, the United States and the wider international community, not just in response to these events but well before. On Pakistan, why have the British Government failed to be more critical of the Musharraf regime and its deeply damaging actions, most recently in its attacks on the independence of the judiciary, which the Foreign Secretary failed to mention in his statement? Is it not the case that Britain has been totally complicit with the US policy of bolstering President Musharraf over the years? Does not this crisis show how mistaken that policy has been, with extremism having spread and democratic institutions having been so undermined?
	I am sure that the Foreign Secretary will at least agree that democracy is now the way forward, and we welcome the announcement of a new and early timetable for elections. It is clearly essential that Pakistan enjoys elections that are free and as fair as possible in a political climate that is as stable as possible. So can he tell the House what extra support Britain is prepared to offer to the election monitoring mission from the EU? While it is good that the EU is sending 50 so-called long-term observers for the new elections, does he believe that the increase of just seven on the monitoring mission for the 2002 elections is really sufficient, given the heightened tension and especially given that the Commonwealth election monitoring operation was suspended in November and has yet to be invited back to Pakistan? Is there not a danger that the February elections will have less international scrutiny than the flawed 2002 elections? Given the crucial role of the judiciary in supervising elections matters, what representations are being made to President Musharraf to insist that he reverses his recent dismissal of critical judges and ends the intimidation of the entire legal profession?
	On Kenya, may I thank the Government in their various public statements for not referring to Mr. Kibaki as the new President? Will the Foreign Secretary confirm that the Government still do not recognise Mr. Kibaki as having been re-elected President? Did the Foreign Secretary share my concern when the US State Department, in the first crucial hours after the poll, rushed to accept the flawed election result? Has he raised the serious consequences of that critical error of judgment with the US Secretary of State?
	Is it not the case that a rigged election result was both predictable and preventable, when we saw—more than a year ago—the rigging of the electoral commission of Kenya by President Kibaki? When in January last year Lord Steel of Aikwood raised the issue in the other place, the Foreign Office said that it would take up the matter with the Kenyan Government. What representations were made and were they made at ministerial level? Does the Foreign Secretary accept that the stacking of supposedly independent electoral commissions seriously undermines the task of any international election monitoring mission even before they arrive? Is he aware that with elections due in Angola, Malawi and Ghana in the next 18 months concerns are already being expressed that certain Governments will "do a Kibaki"? Will he undertake to raise with the relevant officials of the EU and the Commonwealth Secretariat the need to reform election monitoring processes so that they begin with preparatory visits to report on the independence of the election authorities themselves?
	I am sure that the Government and the wider international community are right to prosecute the case for political parties to work together, not least to end the violence and prevent further chaos, but does the Foreign Secretary accept that a coalition Government can be only an interim solution, not least because President Kibaki has previously reneged on power-sharing deals with Raila Odinga, as the right hon. Gentleman implied? Does not the only sustainable solution lie in fresh elections? Why have the British Government not already called for fresh elections? Does the Foreign Secretary not realise that there is a massive danger of more violence—

Mr. Speaker: Order. I must be fair to Back Benchers. I have already made it known that the Liberal Democrat spokesman should have three minutes. The hon. Gentleman has now taken four minutes, so I must stop him.

David Miliband: I welcome the hon. Gentleman to his new position and look forward to his questions and to our debates. I welcome what he said about Mrs. Bhutto.
	The hon. Gentleman raised some serious questions. The policy of the British Government throughout the period in respect of Pakistan, and in respect of other countries, is to support systems of government, not personalities. Before he starts throwing around allegations about whom we have bolstered and how we bolstered them, he should look at what has actually happened in practice. I defy him to find any example of the Government's supporting the crackdown on the media or the rejection of the development of a state of emergency.
	In respect of the judiciary, the judges who were dismissed were precisely those appointed by President Musharraf after 1999, so the hon. Gentleman should be careful about the allegations that he throws around. It is obviously vital that an independent judicial process is established and it is obviously right that we assert the case and continue to argue for an independent judicial process. I do not think it would be right for us to try to dictate about individual judicial cases or individual judges. Our position is to defend constitutional principles and the constitutional order.
	In respect of election monitoring, the hon. Gentleman made an important point about the EU mission, which I raised with Commissioner Ferrero-Waldner just before the new year. She confirmed to me that the EU would up the number of monitors to 60 from the 40 who were present for the 9 January elections. Today, there has been some talk of the number being increased to about 100. We obviously want to make sure that, combined with Commonwealth and other monitors, they are able to provide the evidence we need. In addition, I point the hon. Gentleman towards the need for the processes to be very transparent on the Pakistani side, and I am sure he would agree.
	I can confirm that we have recognised no new Government in Kenya. In respect of the United States position, I spoke to the Secretary of State on 30, or possibly 31, December. She made it absolutely clear to me that although the United States was happy to congratulate the Kenyan people on the way in which they had participated in the democratic process, it had issued no congratulation to an individual "winner"; that her concerns about the irregularities identified by the EU are serious and real; and that she shares our commitment both to the spirit of compromise to which we referred in our joint statement and, critically, to the sharing of power.
	On the wider African elections, I referred in my statement to the forthcoming elections, which is why the engagement of the African Union is particularly important at this stage. The right hon. Member for Richmond, Yorks (Mr. Hague) asked about a British envoy. Although there are contingency plans for us to have additional Ministers or officials in the region, our first priority has been to try to ensure that an African mediator can go there, which is why we support so strongly the Kufuor mission.
	The hon. Member for Kingston and Surbiton (Mr. Davey) called for fresh elections. Whatever the irregularities of the recent election, they reveal a deeply divided country, and that will not be overcome however many times the election is rerun. Every allegation of irregularity must be investigated, but the deeper issue—the nature of the constitutional system, and whether a winner-takes-all system is right for Kenya—is one that many Kenyans are debating. I suggest to the hon. Gentleman that that is an important part of the mediation process that needs to be under way. Of course, fresh elections will be part of the discussions between the political parties, but they will have to be the end of the process, not the beginning of it.

Hilary Armstrong: My right hon. Friend is absolutely right that the people of Kenya are looking to have a Government who reflect the diversity, and not just one particular tribe that happens to look as though it is successful in an election. Speaking from my experience in Kenya long ago, tribes were always important there, but so too was the ability to work together, certainly in the coastal province where I worked. I would appreciate hearing from the Foreign Secretary about how we intend to work with the international community and local people to get the compromise and accommodation that any democracy with such a diverse population needs to move towards.

David Miliband: My right hon. Friend raises the key issue. Her experience in Kenya and that of others in the House will be relevant. In the end, the spirit of compromise has to come from the top; that is why our messages have been direct from the Prime Minister to President Kibaki and Raila Odinga, the Leader of the Opposition. There is also a need for a strong civic society, and political institutions at the local level that are able to bring people together. That process seemed to be starting in 2002. The re-emergence of ethnic divisions is obviously something that all of us deplore and want to avoid.

Tony Baldry: One of the many tragedies of Pakistan is the pathetically small amount of money spent on education—just 1.8 per cent. of gross domestic product. Illiteracy rates in Pakistan are more than 50 per cent., and are increasing. With the collapse of the Government school system, ever more parents simply have to send their children to madrassahs because there is nowhere else to send them. Pakistan is a good ally, but it could turn into a nightmare, as an increasingly illiterate nuclear state. When the Department for International Development engages with Pakistan through its country programme, will we make sure that we are encouraging Pakistan to spend more of its resources on education? Otherwise, it will be an increasingly faltering state.

David Miliband: The short answer to the hon. Gentleman is yes. He will know from what my colleague the Secretary of State for International Development and I have said that we raise both publicly and privately the fact that less than 2 per cent. of national income is spent on education. Education is at the centre of DFID's programme in Pakistan, and I discussed the matter last July when I was in Pakistan. It is absolutely at the heart of the development of a functioning society—development that that country will need.

Gisela Stuart: The Foreign Secretary was right to say that what we need for Pakistan is free and fair elections, but also not to let up on counter-terrorism. He briefly mentioned Afghanistan. Even in more stable times, there are hundreds of thousands of people crossing the borders, both ways, on any one day. In the run-up to the elections, the role of Afghanistan will be even more important than it has been. Will he talk to his NATO colleagues so that they make sure that their troops are in Afghanistan to ensure security, and so that they can possibly look at lifting some of the caveats on deployment?

David Miliband: My hon. Friend raises an important point, which was discussed at the NATO Foreign Ministers meeting in December. It is always discussed when I meet NATO and other colleagues, because obviously the problem with the Afghan-Pakistan border needs to be addressed on both sides of the border. That involves British and other troops on the Afghan side, and large numbers of Pakistani security forces on the Pakistani side. However, in the end, there needs to be a political and not just a military solution in the federal administrative areas.

Paul Goodman: I represent some 9,000 voters of Pakistani and Kashmiri origin, and many of them have made clear to me their horror at the murder of Benazir Bhutto. As the Foreign Secretary knows, nearly every serious al-Qaeda plot since 7/7 in Britain has had some connection with Pakistan, so what monitoring arrangements do his Department and the Government have in place to measure the effect of incidents such as the murder of Benazir Bhutto, or the recent storming of the Red Mosque, on communities in Britain who follow very closely what happens in Pakistan, and who are often influenced by what occurs there?

David Miliband: The hon. Gentleman is right that not least through media that are watched both in Britain and in Pakistan there is a common political discussion and discourse across the two countries. We try to stay in touch through our contacts both with community leaders and with ordinary members of the community. Personally, I am suspicious of opinion polls that are bandied around as definitive, and I prefer to rely on more qualitative information. I am sure, however, that he would agree that anything that helps to build a decent society in Pakistan that respects all its different communities can help to lessen tensions and contribute to the notion that the vast majority of Pakistanis, whether in Pakistan or Britain, are dedicated to fighting against al-Qaeda, rather than to fighting for it. That is the battle for hearts and minds in which we are all engaged.

Gwyneth Dunwoody: It is unfortunate that two situations that are wholly different in kind, except for the element of violence, should be taken together. However, since successive British Governments have consistently ignored corruption in Kenyan Governments, may I ask the Secretary of State what attempts we have made to provide practical assistance both to protect the populations who have been abandoned in various areas, and to protect transport from Mombasa to western Kenya, which will not only be extremely difficult to keep up but will meet increasing opposition at various points?

David Miliband: I am sorry to hear my hon. Friend say that successive Governments have ignored the corruption in Kenya. As I said earlier, the fact that the British Government give no direct budget support for the Kenyan Government precisely reflects our concerns. Our determination to provide significant aspects of funding through NGOs and other trusted civic society organisations reflects precisely the concerns that she and I share. She is absolutely right to raise the security situation for aid convoys. As I said to the right hon. Member for Richmond, Yorks (Mr. Hague), so far those convoys have proceeded without interruption, and that is obviously something on which we want to continue to work. Practically, on the ground, the UN and the World Food Programme are in the lead, but our money and people—I referred to the DFID staff in western Kenya—are there to provide support, and to make sure that any reports of interference with those convoys are acted on swiftly.

Pete Wishart: Let me associate those on my Bench with the condolences to the Bhutto family. We very much hope that those responsible are tracked down and apprehended.
	Ordinary Kenyans believe that they have the power to transform their future, and millions of them turned out to vote to do so last month. They think that their voice has not been heard, and they feel disfranchised as a result. Does the Foreign Secretary agree that what is required is strong, independent electoral commissions in developing countries, and will he work with the international community to deliver them and make sure that they are properly supported and resourced?

David Miliband: Yes; of course, independent electoral commissions that have the confidence of different communities in different countries are important. An earlier questioner referred to the electoral commission in Kenya. It would be quite wrong for any cloud to hang over the chairman of the Kenyan commission, who is long-serving and has done a very good job in difficult circumstances. I accept the concerns that have been expressed about the way in which the bodies are filled. It is certainly an important part of British Government policy to ensure that independent electoral commissions are genuinely independent.

Diane Abbott: The Foreign Secretary will be aware that Britain's Pakistani community is extremely exercised by events in Pakistan, and the circumstances of Benazir Bhutto's death remain extremely contentious. We are glad that British police are going out to support the Pakistani police, but does he accept that most people in Pakistan have no confidence in an inquiry led by the Pakistani authorities, whose first act was to hose down the crime scene? Is he telling the House that he has completely ruled out the possibility of a genuine, independent inquiry led by the UN or another international organisation?

David Miliband: I understand and confirm the sense of grief and concern in many Pakistani communities in Britain. The question of an independent inquiry is obviously not one that we can decide; in the end, it must be decided in Pakistan. We have been very active, however, in ensuring that British expertise is available, without fear or favour, to report on the details obtained from a wide range of evidence—not just local forensic evidence, but the detailed video images that many of us have seen on our TV screens that was taken with mobile phones and other mechanisms.
	My hon. Friend will recognise that an externally imposed solution has its dangers too. A country such as Pakistan needs to come to terms with its own circumstances and have the confidence of its own people; that is why the emphasis in all aspects of development policy is on generating local solutions. She has cried for independence in the system, and that is what our officials are dedicated to trying to provide for the mission that now exists.

Ann Winterton: In the light of the instability in Pakistan following recent tragic events and the need for security and calm in the run-up to the delayed general election, has the Foreign Secretary any information about the possible movement of Taliban members from Afghanistan to the areas of Pakistan where the Taliban are most strong? They may give further grounds for instability.

David Miliband: Obviously, we follow that issue very carefully on all channels—not just in the aftermath of a terrible tragedy such as that in Pakistan, but all the time. All reports are followed up; some are in the media, others are not. The best thing to say is that we take very seriously the need to act on both sides of the border to promote the security not only of our own people but of the development of Afghanistan and Pakistan.

Gerald Kaufman: I mourn Benazir Bhutto, who was my friend. Is my right hon. Friend aware that in her final greetings card, Benazir prayed for peace in the world and happiness for family in 2008? That is bitterly ironic from a woman whose father and other family members were brutally murdered—as she was, ultimately. Does my right hon. Friend agree that the greatest tribute to that brave and charismatic woman, whose final card showed the sun rising over Pakistan, would be properly conducted elections next month, resulting not in hereditary or military democracy, but in a deeply rooted democracy, which would be a memorial to Benazir?

David Miliband: My right hon. Friend has spoken powerfully and completely correctly about the memorial that needs to exist to Mrs. Bhutto, who acted with huge courage, knowing the risks that she faced. We are completely committed to the deep democracy to which he refers, and I know that we will pursue it with him and all his effort.

Shailesh Vara: May I press the Foreign Secretary on the matter, raised by the shadow Foreign Secretary, of those who have fled Kenya to neighbouring countries such as Uganda? Will he give an assurance that, where humanitarian aid is concerned, those who have fled Kenya are also taken into account? A country such as Uganda has its own economic problems; the last thing that it wants is starving and hungry people fleeing from Kenya.

David Miliband: Of course, the hon. Gentleman is right. The international community cannot get into the situation of determining the amount of help that refugees get according to which side of the border they are. We have an active programme in Uganda.
	I say to the hon. Gentleman and the right hon. Member for Richmond, Yorks (Mr. Hague) that we do not yet have reports of the issue becoming a cross-border one. The more than 120,000 or 130,000 people in the Rift valley remain there; they have not moved from that area, although they have moved from their homes. I am sure that the hon. Gentleman knows as well as I that Kenya has a strong civic society that provides family and other support. That partly explains why, certainly to our knowledge, the vast majority of refugees are in the country.

Fiona Mactaggart: Speaking as a Member of Parliament who represents a very large Pakistani community and a not insubstantial community of people who are Kenyan citizens, I believe that the thing that connects the two issues is the sentiment common to all people that if ordinary voters can decide the future of their country, they can have confidence in their Government. There is an opportunity for that to happen in Pakistan, but it requires not only an independent judiciary, to which other hon. Members have referred, but an open media. What can the UK Government do to help with that, because unless there is open reporting people will fear that the election is not independent?

David Miliband: My hon. Friend is absolutely right. We can best support the open media that she and I support by making direct representations to the Pakistani authorities, which we have been doing, and by ensuring that a free media is part of the demands that are made by organisations such as the Commonwealth and others. We are certainly determined to do that.

William McCrea: I join the Foreign Secretary in his words of condemnation of the violence in Kenya and in Pakistan and thank him for his statement to the House. In light of the brutal killing of the women and children in the church on 1 January and the fear that that has engendered, what contact has been made by the British authorities with British citizens in Kenya, especially missionaries, and what advice has been given to them?

David Miliband: The hon. Gentleman raises a really important point, which I have discussed regularly with the high commissioner. As he probably knows, there is a system of ward outreach to British nationals in Kenya, as in many countries, whereby we try to ensure that the vast bulk of them, if not all, are registered with the high commission. The best means of contact, whether that be telephone or other methods such as e-mail, are established so that they can be kept in touch with actions. If the hon. Gentleman has any contact with missionaries whom he thinks might not be part of that telephone or e-mail tree, I am happy to recognise that. However, we are determined to try to ensure that in all countries, such as Kenya, we have rapid systems for making contact with as many British citizens as possible. So far, the system seems to be working, because although we have put on call a series of crisis teams, the number of calls to the Foreign Office in London and to the British high commission in Nairobi has been relatively limited, usually in single figures on any one day. That suggests that the mechanisms that we have in place are working, but we are always happy to try to improve them.

Jeremy Corbyn: The Foreign Secretary rightly drew attention to the rising and widespread growth of inequality in Kenya and in Pakistan. Would he care to reflect on the fact that the world is now seeing on its television sets the appalling poverty in the slums in Kenya and the failure of the democratic system to provide any sort of equality of opportunity for many people in Kenya, and that in Pakistan successive military Governments have spent a vast amount of the nation's resources on weapons of mass destruction, which have obviously had an impact on many people's lives? Does he have any hope that a restoration of a proper democratic system in both countries will help to close this yawning gap, which is at the heart of an awful lot of these problems?

David Miliband: My hon. Friend is right to draw attention to this matter, and I am pleased that he does so. Yes, I do have hope, but there is no point in looking at this through rose-tinted spectacles. Hope needs to lead to decisions that make a difference. Economic growth is the first precondition for tackling the endemic poverty that he and I abhor. In 2005, I saw for myself in the Kibera slum in the centre of Nairobi the sort of conditions to which he refers. Hope needs to lead to choices, which are best made on the basis of a democratic mandate, in the interests of stability and equality. However, no one who visits Kibera can say that this is anything other than a long-term challenge and one that it would be absurd to be glib about. That is why it is right to talk about five, 10, 15 or 20-year challenges, not just five-day or five-month challenges.

Tobias Ellwood: The Secretary of State talks about combating terrorism, but fails to mention the one thing that links Pakistan to events in Afghanistan and to 9/11, 7/7, Bali and Madrid—the al-Qaeda training camps that are on the Pakistani border. Does he agree that Pakistan should now hold up its hands and say that it cannot contain that 400-mile mountainous border and that international help is needed, because otherwise we will continue to see a conveyor belt of suicide bombers coming out of that area, causing mayhem not only in Pakistan but in other places around the world?

David Miliband: The hon. Gentleman does not need to find division across the House on that point. He will have heard in my statement the reference to the joint fight against al-Qaeda. He will also know that we are strongly committed to the international support for the Pakistan and Afghanistan Governments that will be necessary. However, that cannot merely be military support. In the end, there needs to be a political solution in both Pakistan and Afghanistan. A military element is needed, but it will not do the trick on its own. There is room for common ground across the House on that point, and that is what I am determined to try to seek.

Sally Keeble: On Kenya, how will my right hon. Friend, who said that it is down to Kenyans to decide, and the international community assess the validity of any coalition Government? How will they expect such a Government to perform on power sharing and tackling corruption, and what will they expect the possible duration to be? If problems with electoral fraud are proven, Kenya needs not only to be able to move forward, but to do so with the full confidence and support of the international community.

David Miliband: I know that my hon. Friend has spent time in Kenya and has good contacts there. In answer to an earlier question, I said that I thought that any Government who would command the confidence of the Kenyan people needed to involve the main Opposition party. Government needed to involve both Government and Opposition. That is the first test.
	Secondly, the duration would obviously be a subject of discussion. All sorts of time frames are being bandied around by the Opposition and the Government. Obviously, it could not be longer than five years, but a range of other durations are being suggested. Some would make the new Government more interim than would others. The diverse communities in Kenya and the diverse votes that they cast in the election need genuinely to be recognised, and that is the sort of Government that our Government would be keen to support.

Hugh Robertson: While nobody would underestimate the difficulty of protecting any democratic politician, is it not concerning that the assassin was able to get to Benazir Bhutto so soon after her return to Pakistan? Is the Foreign Secretary concerned about the extent of militant influence over the Pakistan security forces? If so, is he convinced that when carrying out his entirely laudable aim to increase co-operation on terrorism with the Pakistan security forces any information would remain secure?

David Miliband: Obviously I am concerned about the ability of terrorists to strike at the heart of Pakistan, not only on 27 December but in October when Mrs. Bhutto returned to Pakistan. However, I can assure the hon. Gentleman that we have full confidence that the counter-terrorism co-operation in which we are engaged with the Government of Pakistan is in the interests not only of Pakistan but of the UK, too.

Jim Sheridan: It is not often that I agree with the comments or views of the hon. Member for Bethnal Green and Bow (Mr. Galloway), but he makes a valid point today, writing in the  Daily Record, that the tribalism in Kenya is another form of nationalism. Does my right hon. Friend agree with me that if we are to learn lessons from Kenya, which was a perfectly stable country until recently, the people who promote extreme nationalism in this country should be careful with their language and also with their actions?

David Miliband: I am happy to agree that we should always be careful about our language and our actions while recognising that countries can be very different. I think that my hon. Friend and I share the view that the constitutional arrangements in the UK respect diverse views in a way that builds on what we hold together while recognising what is different.

Crispin Blunt: The Prime Minister, on Kenya, has used expressions such as "these are the objectives I wish to see". The Foreign Secretary has outlined the type of political system that he might like to see in Kenya and replied affirmatively to the point made by the hon. Member for City of York (Hugh Bayley) about the need for political parties here to get involved in Kenya. Those are all political objectives of the British Government, the merits of which can be debated in the House. However, the Foreign Secretary presides over a Department that will have to cut three missions in Africa, while the Department for International Development is unable to assist in the pursuit of British national objectives in the way described by the Foreign Secretary, the Prime Minister and others. Is the Foreign Secretary satisfied that the balance of investment to support the British national effort is correct?

David Miliband: Yes. I would like to know where the hon. Gentleman thinks that DFID is not fulfilling an agenda that is in the British national interest—or the Foreign and Commonwealth Office, for that matter. The consular response in these cases has shown our ability to do so; the political response, ditto. As always in the seven years of discussion I have had with the hon. Gentleman, if he is willing to provide any details I will be happy to follow them up and get in touch with him.

Patrick Mercer: The Foreign Secretary is very aware of the desire of al-Qaeda and similar organisations to inflict mass casualties. Is he confident in the security of nuclear weapons and matériel in Pakistan?

David Miliband: It is good that the hon. Gentleman raises that matter, which was raised on the two previous occasions when I talked about Pakistan. I am happy to confirm that nothing has been reported to us since 27 December that would compromise our assessment of the integrity and safety of Pakistan's nuclear facilities.

Julian Lewis: Given the ambiguous credentials of Pakistani intelligence agencies, to which my hon. Friend the Member for Faversham and Mid-Kent (Hugh Robertson) referred, did the Government, in their conversations with Benazir Bhutto, offer her any advice about personal security, especially after the first attempt on her life?

David Miliband: At both ministerial and official level, discussions were held about Mrs. Bhutto's sense of security and the provision that was being made for her. It would be wrong to pretend that I was in a position to offer her personal advice about that, but I know that representations were made at a high level to ensure that her concerns were properly taken into account.

Henry Bellingham: Does the Secretary of State agree that, if an EU monitoring commission finds that the presidential elections were rigged, Kibaki's position would be untenable and that he would rightly become an international pariah? Does he also agree that in such circumstances, smart sanctions aimed at Kibaki and his cronies, their travel arrangements and moving money abroad, would be justified?

David Miliband: Sanctions are only but always justified when they have a clear objective and contribute to that objective. It is dangerous at this stage to start dealing in the hypothetical position that the hon. Gentleman outlines because there is clearly a need to bridge the current gap between what the Government in Kenya and the Opposition say about their willingness to engage in discussions. They are both talking about the matter but they have not yet bridged the gap. Our focus is on bridging that gap. If we fail, we must examine all the consequences, including those of our actions.

Prisons (Industrial Relations)

Jack Straw: With permission, Mr. Speaker, I should like to make a statement on industrial relations in the Prison Service, and on my tabling amendments today to the Criminal Justice and Immigration Bill. The amendments are for debate on Report this Wednesday.
	The aim of the amendments is to provide for a reserve statutory restriction on industrial action by prison officers. The powers in the amendments would be applied only in the absence of a suitable trade union dispute resolution and recognition agreement between the Prison Service and the relevant trade unions. As I will explain, tabling the amendments fulfils clear undertakings given to Parliament by Ministers over six years.
	The Prison Service is an essential public service. Prison officers do a difficult and demanding job. They deal with some of the most dangerous and vulnerable people in our society. Their work is often unseen by the general public. I pay tribute to their endeavours and those of all other staff in the service.
	Prison officers are in a uniformed and disciplined service. When on duty, they are officers of the law with the powers of a police constable. They have a clear duty to uphold the law, protect the public and safeguard the welfare of the prisoners in their care.
	In those respects, their position as officers whose role is essential to the security of the state and the communities in it is similar to that in other essential services, such as the police and the armed forces. Parliament has made it clear and laid down in statute that the risk to the public in each of those services is simply too great to allow them to take industrial action.
	At the same time, it has been well recognised that, without that form of influence, staff need other legitimate means of pursuing grievances and concerns with their employer. In 2000, I established a pay review body for prison governors, prison officers and related grades. Subsequently, in 2001, my right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett), the then Home Secretary, introduced proposals for a comprehensive voluntary agreement with the Prison Officers Association. In 2005, this agreement was replaced by a joint industrial relations procedural agreement, or JIRPA, which provides mechanisms for resolving disputes between the POA and the Prison Service, including binding arbitration.
	Under the JIRPA, the POA voluntarily agreed to legally enforceable constraints on its ability to take industrial action. It was explicitly on that basis that the Government sought parliamentary approval to disapply the statutory prohibition on industrial action in section 127 of the Criminal Justice and Public Order Act 1994 for public sector workers in England, Wales and Scotland. The disapplication was made by an order under the Regulatory Reform Act 2001. In making that order, with the Opposition's broad support, my noble Friend Lord Bassam, on behalf of the Government, said in terms that in the event of notice of termination of the JIRPA the Government would have
	"no hesitation in bringing forward legislation to ensure that that protection"—
	in the disapplied statute—
	"is there."—[ Official Report, House of Lords, 1 March 2005; Vol. 670, c. 222.]
	My hon. Friend the Member for Bradford, South (Mr. Sutcliffe), the then Prisons Minister, spelt this out to Parliament in a written answer the following year in which he said:
	"If the POA gives notice to terminate the agreement with no alternative arrangements being in place, the Secretary of State would ask Parliament to reintroduce statutory constraints such as existed prior to disapplication of section 127."—[ Official Report, 4 September 2006; Vol. 449, c. 1897W.]
	Regrettably, in May last year the POA gave 12 months' notice, expiring on 8 May this year, of its intention to withdraw from this agreement in respect of England and Wales. An equivalent agreement remains in force in Scotland.
	Experience underlines why there must be sufficient protection against industrial action. Most recently, on 29 August 2007, despite being bound by the terms of the voluntary agreement banning industrial action, the POA initiated a 24-hour strike, giving the service just one hour's notice. As the JIRPA was still in force, that strike action was constrained by an interim injunction, but nevertheless it had a substantial impact on the operation of the public sector Prison Service. That included the cancellation of court appearances, transfers of prisoners and the extended use of police cells. The action led to serious disturbances at Her Majesty's young offender institution Lancaster Farms, resulting in significant damage to cells that cost £220,000 to repair.
	The public's safety has to be my primary consideration, but it cannot be acceptable for prisoners to be locked in their cells for an indeterminate period, with great uncertainty about when they will next get a meal, exercise or medication, and with serious risks to their welfare. It has always been, and continues to be, my hope that the Prison Service and POA can agree a new trade union dispute resolution and recognition agreement that would be binding on both parties.
	Early last summer, the Government asked the Trades Union Congress to initiate talks between the Prison Service and the POA, aimed at improving industrial relations and at reaching a new agreement. The talks were conducted under the auspices of Mr. Ed Sweeney, a then senior member of the TUC General Council and now chair of the Advisory, Conciliation and Arbitration Service. Mr. Sweeney's report on the talks has now been sent to both parties and a copy has been placed in the Library. I am extremely grateful to him for his work. His recommendations offer a sound basis for further discussion and a framework for future agreement. I very much hope that the POA will continue to engage with that.
	However, Mr. Sweeney also recognises that, given the current industrial relations climate, in which public safety cannot be guaranteed in the event of industrial action, the Government will need to consider what mechanisms must be put in place should an agreement not be achieved. I very much hope that between now and May a new and acceptable voluntary agreement can be made. I would much prefer the reserve powers in the amendment never to have to be used, but in proposing them I am fulfilling clear and explicit undertakings given to this House and the other place. I emphasise that the amendments reflect the wording of the current joint industrial relations procedural agreement, which defines industrial action as
	"any action likely to affect the normal working of a prison".
	This provides no greater constraint than the one to which the Prison Officers Association voluntarily signed up in 2005.
	The House will also wish to know that legislation of this nature is in accordance with European Union and international law. Similar measures can be found in the constitutions and laws of many other European countries, including France, Germany and Italy. I have placed a copy of a report in the Library that summarises the position in European and other OECD countries.
	I repeat, however, that I am mindful of the need to establish a sound platform on which to secure constructive industrial relations between the Prison Service and the Prison Officers Association. That is why the amendments provide a reserve power, to be activated or suspended by order of the Secretary of State. Should a suitable trade union dispute resolution and recognition agreement be reached—one that includes protections against industrial action—the statutory prohibition would be suspended. That is in line with Mr. Sweeney's recommendation to make any reinstatement of section 127 of the 1994 Act what he calls a passive change, rather than an active way of conducting employee relations in the Prison Service.
	Mr. Sweeney also recommends that an independent review take place two years after any agreement is signed between the Prison Service and the Prison Officers Association. This review would re-examine the balance of arguments for and against allowing forms of industrial action by prison officers. If a suitable trade union recognition agreement is agreed and sustained, I will commit to this further review after a period of stability.
	This year provides an important opportunity for us all to build a new and positive industrial relations climate for the Prison Service. We are committed to engaging constructively with all Prison Service trade unions on a programme of work force modernisation, and we are ready to pay for it. My right hon. Friend the Chancellor of the Exchequer has already made available significant additional funds from April 2009 to support the programme, which could be underpinned by a multi-year pay deal. I very much hope that the Prison Service and the Prison Service trade unions will engage to make the best use of those funds, in order to provide a brighter future for all staff, develop new and more flexible working practices, and create more stable industrial relations within the Prison Service. I commend this statement to the House.

Nick Herbert: I thank the Secretary of State for early sight of his statement.
	Prisons are places of security, in which there can be no place for industrial action. That was why the previous Conservative Government legislated for the statutory prohibition of industrial action in prisons. Does the right hon. Gentleman recall that the Labour party fought tooth and nail against those laws in opposition? Indeed, when he was Leader of the Opposition, Tony Blair said that they were a
	"wholly unwarranted attack on the working rights of prison officers".
	Is it not therefore extraordinary that, having dismantled the statutory ban, the Government should now be threatening to put it back in place?
	We are now being asked to debate new clauses in 48 hours' time, when the Secretary of State has known about the problem for months. Will he assure us that there will be sufficient time on Wednesday to debate those and other important amendments that the Government have tabled since the Second Reading of the Criminal Justice and Immigration Bill?
	The Secretary of State said that the status of prison officers was similar to other essential services, such as the police and the armed forces, where the risk to the public is simply too great to allow them to take industrial action. In that case, what was the justification for repealing the statutory provision in the first place, when it placed prison officers on the same footing as the police and the armed forces? Has not the inadequacy of the Government's no-strike agreement been revealed by the fact that the Secretary of State has been forced to make his statement today?
	In 2001, when he was Home Secretary, the right hon. Gentleman made it clear to the House that independent arbitration on pay would be provided "in recognition" of the repeal of the statutory ban and its replacement with a no-strike agreement. That was the deal that the Government made with the unions. Why, then, are Ministers surprised that the Prison Officers Association considers that deal to have been reneged upon, when the Government have reduced the value of a pay award made by the pay review body?
	When the former Home Secretary, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), announced the repeal of the statutory ban on strikes, that announcement heralded an era of modernisation, reform and change. Have we not actually seen crisis, incompetence and wildcat strikes? Why did the Secretary of State claim to have been surprised by last August's wildcat action, given that it was clear to everyone else that relations with prison officers were deteriorating so fast? Does he accept that the Government's troubles with prison officers go beyond pay? Is it not a fact that conditions for prison staff have worsened significantly over the past 10 years? Prison officer numbers have risen at half the rate of the prison population, chronic overcrowding is putting immense strain on the service, assaults on prison staff have soared by 80 per cent., and now budgetary cuts mean the prospect of prisoners' being locked in their cells throughout weekends. Is it any wonder that prison officer morale is so low?
	Coming into office, the Government promised
	"partnership not conflict between employers and employees."
	Now we have conflict with the police and conflict with prison officers, and no doubt there are further conflicts to come. Has not this emergency statement been forced by a crisis entirely of the Government's own making?
	Ministers repealed no-strike legislation, and within three years they are having to reinstate it. Is that what they mean by a relaunch? They have mismanaged the public finances, mismanaged public pay and mismanaged prisons. Is it any wonder that this Government have acquired a reputation for serial incompetence?

Jack Straw: Let me begin by wishing the hon. Gentleman and the House a happy new year. [Hon. Members: "The same to you."] I thank Opposition Members for reciprocating.
	Let me say to the hon. Gentleman—while parenthetically advising him to change the pitch of his voice a little when he is making statements—that I do not suggest that the operation of the Prison Service over the past 10 years has been perfect or anything like it. If, however, he wants to establish whether it has been better during the past 10 years than it was during the previous 18, I shall be happy to engage in a contest, and I look forward to his using one of the Opposition Supply days for precisely that purpose. The level of industrial disruption within the Prison Service involving, for example, the use of police cells—which involved 3,500 cells at one stage and continued, more often than not, throughout those 18 years—makes our record pale into insignificance.
	The hon. Gentleman mentioned the timing of the statement. Last May, we were given notice that the Prison Officers Association intended to abandon the voluntary agreement that it signed in 2005. We decided, I think rightly, not to rush to reintroduce these powers, notwithstanding clear undertakings that they would be reintroduced if notice was given of intention to terminate the JIRPA. Instead, following an initiative from the Minister of State, Ministry of Justice, my right hon. Friend the Member for Delyn (Mr. Hanson)—the Prisons Minister—we involved the TUC. Mr. Ed Sweeney has produced an important report, on which we are acting. I did not want to make my statement before we had received Mr. Sweeney's report; I am conscious that it does not allow a great deal of time for debate, but I thought that this was the best possible moment.
	As for the hon. Gentleman's nonsense about an emergency statement, when I gave evidence to the Constitutional Affairs Committee in October, one of his hon. Friends asked whether I intended to reintroduce section 127. I said that it was under active consideration, and that remains the position.

Bridget Prentice: The hon. Gentleman must do his homework.

Jack Straw: My hon. Friend is always right about these matters. As she says, the hon. Gentleman needs to do his homework.
	There are two things to be said about the position taken by the Opposition in 1994, about which the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) will doubtless ask a question. If the hon. Gentleman bothers to read the report of the debates that were held at the time, he will see that the allegation that we fought the proposals "tooth and nail" is hardly an accurate description of the criticism expressed from both the Liberal Democrat Benches and ours. My right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael), who led for the Opposition, made the point that if there were to be a restriction on prison officers' right to strike, it had to be balanced by other measures. Moreover, in the three years when I was shadow Home Secretary, I never gave a single undertaking that we would repeal section 127; neither did I do so at any stage when I was Home Secretary, nor did my successors.
	My right hon. Friend the Member for Sheffield, Brightside would have preferred, as would the Delegated Powers and Regulatory Reform Committee, that the change to section 127 be made by way of its suspension, rather than its repeal. That was not possible in the circumstances, but when the measure came before the other place—with the support of the Opposition, who were not making these nitpicking points at the time—clear undertakings were given that in the event of termination of the JIRPA, we would re-introduce the ban.
	I have dealt with the point about chronic overcrowding. There is a degree of overcrowding, but it is nothing like that within the Prison Service in the 1980s and early 1990s. The ratio of prison staff to prisoners has remained stable at between 1:21 to 1:22. However, quite a lot of the duties previously undertaken by prison officers are now undertaken by operational support grades—for example, people working in gatehouses who do not have direct contact with prisoners. Before the hon. Member for Arundel and South Downs (Nick Herbert) next makes that point, the question for him is whether he is proposing that a future Conservative Government, whenever that might be, would reinstate those jobs to prison officers. If not, what on earth is the point he is making?

Frank Doran: I thank my right hon. Friend for his statement and particularly for pointing out in his response to the Opposition that there is a long history of very poor industrial relations in the Prison Service. I hope we can move from the regulation and the statutory provision that he has proposed back to proper negotiation. Is he aware that from the point of view of the Prison Officers Association, there is a sense of imbalance in the relationship between it and the management of the Prison Service? Will he say a little about what the Sweeney report recommends in relation to that imbalance, if it is recognised?

Jack Straw: I am very grateful to my hon. Friend for the terms in which he makes his point. A copy of the quite lengthy report is available, but essentially Mr. Sweeney is seeking to produce a more effective voluntary agreement with different forms of arbitration; for example, to reduce the arguments about whether an issue is suitable for arbitration, which has been one of the problems of the JIRPA, and to make the arbitration more acceptable. Along with work force modernisation, for which more money is available from April next year, these and other improvements should lead to a major change in the industrial relations climate within the service, which is my commitment. As I said, I would much prefer us to achieve a situation—I think that this is possible—where these statutory powers do not have to be used.

David Heath: I genuinely thank the Lord Chancellor for giving me early sight of his statement; it is a good start to the new year.
	Is not the only thing that could exacerbate the chaos that the Government have created in the Prison System a wholesale withdrawal of good will by prison officers? Strikes are never appropriate in prisons, but no-strike arrangements can work only when there is effective dialogue and trust—an important word—between the work force and management or Government.
	In the draft that the Lord Chancellor kindly sent me, there was an unfortunate typographical error. At one point, it said that the Government sought to "misapply" the statutory prohibition. Is not that exactly the problem of trust between many in the public service—particularly the uniformed branches of the public service—and the Government? They do not trust the Government not to misapply the arrangements in these areas and there is a strong feeling that they are increasingly taken advantage of as a result. Is that not exemplified in one of the problems with the Prison Officers Association—the staging of pay awards?
	Will the right hon. Gentleman explain why the staging of a pay award is counter-inflationary when the same point is reached by the end of the year? It is rather a case of providing slippage within departmental budgets. Should not we have clear arbitration binding not only on the work force, but on the Government and the management ? Is the Lord Chancellor confident that any contingency plans involving the police will be substantive—if, indeed, the police are asked to intervene in circumstances almost identical to those of their own grievance with the Government?
	Mr. Sweeney makes an important point in paragraph 4.7 of his report:
	"In my opinion industrial relations between the SPS"—
	the Scottish Prison Service—
	"and the Scottish members of the POA are far more positive than those between HM Prison Service and the POA in England and Wales. This reflects the commitment of both sides to building a positive working relationship",
	which has been the case
	"over the last six years."
	Why is there that difference between the circumstances in Scotland and those in England and Wales? Given the increasing permeability between the private and the public sectors, will the prohibition apply in similar terms to those working in the private sector within the prison system? Should we not recognise the very difficult job that prison officers undertake on our behalf and ensure that their efforts are properly recognised, along with those of other members of the uniformed services?
	The Lord Chancellor did not answer the point made by the hon. Member for Arundel and South Downs (Nick Herbert) about the Criminal Justice and Immigration Bill. The Bill now extends to two volumes and has more than 170 clauses and a second volume of schedules, and it addresses matters of huge importance to Back-Bench—and, indeed, Front-Bench—Members. The Lord Chancellor is now interpolating yet another section into the Bill. Does he really believe that this House is being properly dealt with in being provided with a single day to discuss the Bill's remaining stages? Is it not inevitable that large parts of important proposed legislation will remain undebated by this House, and that the attentions of the other House will be required to put that right, as is so often the case?

Jack Straw: I apologise to the hon. Member for Arundel and South Downs (Nick Herbert) for not answering his question; I meant to do so. I appreciate that there are pressures on time in the House. My right hon. Friend the Chief Whip has arranged for the business of the House on Wednesday to extend until 8.30 pm and I hope that that is sufficient.
	I spotted the typo, and it was changed. The hon. Member for Somerton and Frome (Mr. Heath) was, of course, breaking a trust in mentioning it, as all such material is provided in confidence.

David Heath: It was too good to miss.

Jack Straw: It was.
	The staging of any pay review reduces the total cost in the year concerned, and I simply say that the Government have not sought to stage any of these pay awards lightly. Indeed, we are well aware of the impact that that has had on relations, particularly with the police service and the Prison Service, but it was essential that we reduced inflation and interest rates. Prison officers and police officers, along with all other members of the public services, would have suffered disproportionately if we had not been able to take that effective action. That is why we had to do this.
	The hon. Gentleman asked about the relationship between the pay review body and any joint agreement. The joint agreement does not directly deal with pay, and nor would it as it is a subject for the pay review body. We always hope to be able to accept in full the recommendations of the review body, but that is subject to overriding considerations of national economic interest.
	The hon. Gentleman asks about contingency arrangements with the police. As we have to keep these matters confidential, let me just say that arrangements are in place and they will be used if necessary, but there is no way in which the police can do the job of prison officers and other staff.
	As for Scotland, Mr. Sweeney said in the same paragraph as that quoted that
	"it needs to be borne in mind that HM Prison Service"
	for England and Wales
	"are operating a larger and arguably more complex Service than the SPS",
	but we stand ready to learn from Scotland—Mr. Sweeney makes that point.

Pete Wishart: indicated assent.

Jack Straw: I am glad to see that one of the representatives from Scotland is nodding. I should add that it has always been ready to learn from England and Wales, and long may that continue. The private sector is already the subject of the 1994 Act, and that was not changed by its repeal under the order made in 2005. I of course accept and repeat that prison officers do a difficult job, and I praise them for it.

Tony Lloyd: My right hon. Friend is right to point out that prison officers do a very difficult job, and we should be grateful for what they do. Nevertheless, the whole House will accept that we cannot afford to have this essential service disrupted by industrial action such as the recent one-day action. My right hon. Friend said that these powers will be reserve powers only and that, subject to proper agreement, he is prepared to suspend them indefinitely. Will he give a commitment to the House that not only he but the whole Prison Service will commit to improving morale within the prison service? Underlying all these problems is the fact that morale is simply not satisfactory.

Jack Straw: I am grateful to my hon. Friend for his support and yes, of course I give that undertaking; we want to see far better industrial relations and a high level of morale. The evidence on morale is to a degree contradictory—there is what the Prison Officers Association says, while local surveys provide a different picture. Also, at 2 per cent., the resignation rate from the prison service is the lowest of any service in the public sector. That speaks volumes and is more substantial than other evidence, but I accept what my hon. Friend says and we will do our very best.

Michael Howard: Is this not the most humiliating U-turn by the Secretary of State, who personally campaigned shamelessly for the votes of prison officers in the 1997 election by promising to give them the right to strike? Is it not all of a piece with the conduct of the Secretary of State, who, when shadow Home Secretary, described private sector prisons as morally repugnant and then espoused them with enthusiasm when in office? Has the right hon. Gentleman no shame?

Jack Straw: Let me just correct the right hon. and learned Gentleman. No undertakings were given to repeal section 127— [ Interruption. ] Well, they were not—in the 1997 manifesto; not a word. He, too, should do his homework rather better. Moreover, he will remember—because I have a feeling that he was shadow Home Secretary for a short period—that quite quickly after I became Home Secretary following his august period, the POA sought to test whether I was serious about not repealing section 127. It took industrial action, and I then had to seek an injunction in respect of that. I had made it clear over the three years that I was shadow Home Secretary that although I of course wanted different relations, I did not believe that we should repeal section 127 without the equivalent of a voluntary agreement.
	I should point out to the hon. Member for Arundel and South Downs that when Paul Boateng, as Prisons Minister, set out on my behalf the arrangements that we were bringing in for the pay review body and for what then became the JIRPA, we were very clear that we were going to seek not the repeal of section 127 but its suspension as a reserve power. It was only as a result of the technical problems associated with the Regulatory Reform Act 2001 that we had to go down the route of repeal and, therefore, of reintroducing legislation now.

David Taylor: My right hon. Friend the Lord Chancellor must look longingly north of the border to see why, as he said in his reply to the hon. Member for Somerton and Frome (Mr. Heath), industrial relations there are so much better than they are south of the border. The answer is the existence of a simple two-word phrase: a partnership agreement. Is it not possible to encourage the prison boards in England and Wales to move away from their often bovine, Victorian mill-owner approach to industrial relations? It will require, as the Prison Officers Association says, a complete sea change in the actions and attitudes of the people on those prison boards. What can the Lord Chancellor do to bring that about any time soon?

Jack Straw: If I may say to my hon. Friend, I do not recognise that description of good, positive Prison Service management. However, we need a new future for both sides, and that is what is on offer and what I want to see. Not just that is on offer—money is available for work force modernisation. Although I fully understand that my statement today will not be comfortable for the Prison Officers Association, I hope that it will recognise that there is a chance here to take forward work force modernisation. Additional money will be available from April, and Mr. Sweeney made important and positive recommendations, on which we want to act.

Alan Beith: While I accept the action that the Lord Chancellor hinted was going to become necessary when he appeared before my Select Committee, did he note the view in Mr. Sweeney's report that relations at local level were generally reasonable or good and that it was at national level that relations between the Prison Officers Association and the Prison Service were at a particularly low ebb? Have there not been failings on both sides over the years that have brought this about? Is it possible to change them, given the background of the pressures of overcrowding and the mishandling of the police arbitration settlement, which has created a lack of confidence that the Government will stick to their side of the bargain when no-strike provisions are in force?

Jack Straw: The right hon. Gentleman is correct to say that relations at local level are on the whole good—he makes the point that I made earlier. The issue of relations at national level needs to be addressed. I hope that the House will acknowledge that my statement did not seek to start allocating blame; I want a different industrial relations climate for the future. I have long believed that that must be underpinned by a voluntary agreement, which excludes industrial action—I think that that is now the view of the whole House—or, if that cannot happen, by a reserve power making that statutory.

Neil Gerrard: Given the acknowledged very poor state of industrial relations at national level, does my right hon. Friend have concerns that announcing the reinstatement of section 127 before any negotiations have taken place on the Sweeney report's recommendations will make it a lot more difficult to reach a speedy and sensible agreement with the POA on those recommendations? We need an agreement that gives recognition to the POA as an independent trade union and replaces the JIRPA with an accepted and agreed process for resolving disputes, and, like the Scottish model, allows the union, rather than just the management, to initiate changes through that agreement.

Jack Straw: My right hon. Friend the Prisons Minister and I have met the POA on six or seven occasions since we took office in June last year. Of course I would like to be in a different position, but there has never been any dubiety about this matter. Mr. Sweeney's report states:
	"I do not believe at this point in time it will be possible to meet this policy position of the POA. Employment relations in the Prison Service actually militate against meeting this policy consideration"
	—which is for an end to any either voluntary or statutory ban—
	"as does the absence of any form of minimum cover arrangements".
	In that light, I thought that this was the appropriate time to bring forward these proposals for legislation on the reserve power. It would have been false of me to have sought to negotiate a voluntary agreement with the POA without making it clear that if a voluntary agreement could not be achieved, we would have to introduce legislation on a reserve basis.

Tony Baldry: One would hope that the Lord Chancellor of England would always have an instinctive sense of what is fair. Governments of all persuasions have taken away the right to strike from various public sector workers, but in consideration of that, they have set up either independent pay review bodies or independent arbitration bodies. Surely what is fair about that is that the Government should then honour what those pay review bodies recommend. I am sure that the Lord Chancellor will recognise that it is not fair for payments then to be staged, because that does not honour the pay review body's agreements. Governments can take that approach but, as someone whose constituency, like that of many hon. Members, contains a prison, I must tell him that it leads to a sense of frustration, betrayal and mistrust, it is bad human relations and bad labour relations, and it is also inherently unfair.

Jack Straw: I accept the hon. Gentleman's basic point that where a work force is prevented, by one means or another, from taking industrial action, the Government have a double responsibility to ensure that any disputes, including those in respect of pay, are dealt with extra fairly. In normal circumstances we would accept the recommendations of the Prison Service pay review board, but these were not normal circumstances for reasons that I have already explained and they involved difficult judgments. I know that they were not popular with prison officers, and I understand why. However, if we had gone down the alternative route across the public sector as a whole, it would have been that much more difficult to have convinced the Monetary Policy Committee of the Bank of England that we were getting a grip on public sector pay-led inflation. The result would have been that interest rates would not now be on a downward path, and everybody would suffer.

Jeremy Corbyn: Is the Minister really happy with the idea that a Labour Government should be effectively taking away the right to strike from a group of public sector workers? While he says in his statement that it is in accordance with EU and international law, is he really satisfied that it fulfils the obligations that we have under International Labour Organisation treaties on the right of workers to join and act in independent trade unions?

Jack Straw: I am not in any doubt as to the latter point. My hon. Friend will be able to read the detailed report that I have issued today about practice elsewhere in Europe and other Organisation for Economic Co-operation and Development countries, with an analysis of our obligations, and he will then see why I am so confident about saying that. Almost all jurisdictions have prohibitions on the police and armed forces taking industrial action and many, across Europe and other OECD countries, have similar restrictions, which are entirely lawful internationally, in respect of prison officers, for the same reason. Of course I understand the argument that my hon. Friend makes, but it must be balanced against the impact on public safety and the welfare of prisoners if industrial action is taken in that particular case. I have asked the Prison Officers Association time and again what it would do were it in my position and faced with industrial action by prison officers that meant that prisoners could not be fed, would not know when they would next be able to exercise and, in the case of many prisoners who unfortunately have mental health problems, would not know when they would next receive medication. Those are the considerations that have to be balanced, and that is why we have now reluctantly reached a consensus across the Chamber that such industrial action must be restricted by one means or another. At the same time, we have to put in place better and alternative arrangements.

Julian Brazier: Canterbury prison is in my constituency. Does the Secretary of State accept that one of the key reasons behind the huge rise in attacks on prison staff and the inevitable effect that that has on morale is the progressive undermining of the disciplinary climate by human rights legislation? What message does he have for those warders who were unable, in a well reported case last week, to deliver a prisoner to court because he was deemed to have a right to continue to occupy his cell because somebody else might otherwise take it?

Jack Straw: I do not accept what the hon. Gentleman says. I am writing to all right hon. and hon. Members with prisons in their constituencies setting out in more detail what I have said today. In the well publicised case that he mentions, I asked for immediate information because I would have found it no more acceptable—if the reports were true—than did the hon. Gentleman. I am happy to write to him with more detail, but I have been told that it simply was not the case that the prisoner stayed back because he was claiming human rights to his own cell—there is no such recognised right in domestic or international law—but because his legal advisers had told him that his visit to court was not necessary. The Prison Service is clear that if a prisoner is due in court and has no good reason for refusing to go—such as legal advice—he will, if necessary, be forcibly removed from prison to appear in court. That remains the case.

David Drew: Does my right hon. Friend accept that one of the problems is the apparent inconsistency of approach? Some of us believe fundamentally in the right to strike, and we also ask public sector workers in very responsible positions to show restraint. We need consistency, and we need to recognise the hurt felt by the POA. There is no substitute for good negotiation.

Jack Straw: Of course I recognise the conflict of principles, but as I said to my hon. Friend the Member for Islington, North (Jeremy Corbyn) in this case the principle of safety of the public and the welfare of prisoners has to take precedence. Meanwhile, there can be no substitute for good relations and it is that to which I have committed myself, as has my right hon. Friend the Prisons Minister, the director general and all his staff. We want a different way of resolving disputes in the Prison Service.

Crispin Blunt: However much the Lord Chancellor tries to patronise my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), or shamelessly reinvent history, he cannot escape the fact that today's decision is a humiliation and a consequence of the Government's management of the whole Prison Service. There are two prisons in my constituency, one of which—HMP Downview—was a leading centre for treating addiction in male offenders. Under the Lord Chancellor's time as Home Secretary, the Government managed, at only two weeks' notice, to turn it into a women's prison with the complete destruction and loss of the valuable programmes in the prison. Changes at HMP Highdown mean that the prison has to accept 360 new places in three months, with a vast increase of detached duty officers going to the prison to make the changes work. That is a consequence of the Government's inability to cope with wholly predicted increases in prisoner numbers, male and female. The decision today is a reflection of the Government's mishandling of the Prison Service and the consequent anger of the Prison Officers Association.

Jack Straw: I simply disagree. We have been far more effective at managing prison numbers than the Administration the hon. Gentleman supported for 18 years ever were. That is measured by the fact that we have not had to use police cells anything like as often or as extensively as happened repeatedly under the previous Administration. Nor have I ever had to come to the House as Douglas Hurd did to announce the release of 3,500 prisoners just like that, so I want no lectures at all—

Nick Herbert: You've released 25,000.

Jack Straw: And continuing—on executive release.
	On consistency, it was made absolutely clear to prison officers, by me back in 2000 and again in 2005 by Prison Ministers, that if they gave intention to terminate the voluntary agreement, with a voluntary ban on industrial action, section 127 would be reintroduced. The difference is that I am reintroducing it as a reserve power, and I very much hope that we can achieve another voluntary agreement before the beginning of May.

Jim Devine: May I shine a wee bit of light on industrial relations in Scotland? As my right hon. Friend knows, when I was head of health for Unison in 1997 industrial relations were poor, so we set up a model—called partnership working—that was legislated for and had the same legal standing as clinical governance and financial governance. To the credit of the last Scottish Government and the current minority Scottish Administration, they both signed a memorandum of understanding, which has had a big impact on industrial relations. We will happily give my right hon. Friend the expertise of the Scottish health service and the Scottish TUC if desired.

Jack Straw: I am grateful to my hon. Friend for his comments. I am very ready to learn from experience elsewhere, not least that of a good Labour Administration in Scotland.

Peter Bone: On 29 August, I visited HMP Wellingborough where I met 30 striking prison officers. Those hard-working, decent men and women did not want to be on strike, but they felt that the Government had broken their agreement. I am sure members at the prison would be happy to accept a no-strike agreement if the Government agreed to binding arbitration, not arbitration that can be changed, as the Lord Chancellor said, in the national interest.

Jack Straw: May I make it clear that of course I understand the anger of the prison officers, although I do not think that it justified their industrial action on the 29th? Presumably that is the hon. Gentleman's view, too. We broke no undertakings or agreements, because it has been made clear by successive Governments that we will always be minded to accept the recommendations of pay review bodies, except where there are overriding economic considerations in the national interest. An important detail is that the joint industrial relations procedural agreement, or JIRPA, does not deal directly with pay, which is, and will continue to be, dealt with under the pay review arrangements.

David Anderson: The Lord Chancellor spoke of the POA walking away from the JIRPA. The reality is that the POA could not make the JIRPA work because the management—a management that is prepared to discipline people for wearing a trade union badge—were interested in going to court at the drop of a hat. Will he tell us what exactly will be done to improve the quality of management? If there is no such improvement, the new agreement will not work either.

Jack Straw: Of course opinions differ, as they often do in respect of industrial relations. In the case of the Prison Service, the employees and employers have different perceptions; I do not want to comment on that. In my view, the report from Mr. Ed Sweeney provides a positive way forward. My hon. Friend will know from his trade union experience that there have been plenty of occasions on which although relations have not been all that good, they have got better as a result of good will on both sides and new agreements. That is what I hope will happen in the four months before 8 May.

Point of Order

5.21 pm

Jim Devine: On a point of order, Mr. Deputy Speaker. I wonder whether you would use your good offices to invite my right hon. Friend the Home Secretary to come to the House and make a statement about newspaper articles over the weekend, which said that Prince Andrew has—

Mr. Deputy Speaker: Order. I am reluctant to stop the hon. Gentleman before he has even got going, but I understand that his point of order relates to a matter of security. He should know that it is not the practice to discuss the security of individuals on the Floor of the House, for obvious reasons. The Chair has no responsibility for security matters, except in relation to the House.

Jim Devine: Further to that point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: No, I have dealt with that point of order.

Orders of the Day

Pensions Bill

Order for Second Reading read.

Peter Hain: I beg to move, That the Bill be now read a Second time.
	It is the duty of every Government to keep the contract between the state and the individual under constant review to ensure that the balance between rights and responsibilities is properly maintained. At the end of last year I set out how that contract will be renewed through welfare reform, as we move from a regime of passive benefits to one of active benefits. The Bill will enact the remainder of the landmark pensions reform package set out in May 2006 in the White Paper, "Security in retirement: towards a new pension system", the first part of which became legislation in the Pensions Act 2007.
	The Government have achieved a lot since 1997. We are spending £11 billion more on pensioners each year than would be spent if the policies of the last Conservative Government had been followed. This year we have spent £75 billion on provision for pensioners—around 13 per cent. of all public spending. Pension credit, winter fuel payments, free TV licences and above-inflation increases to the basic state pension have brought more than 1 million senior citizens out of relative poverty. Rolling out free bus travel right across Britain has also extended opportunities for pensioners. However, the challenges posed by our ageing society mean that we have to look ahead not a year at a time, but decades at a time.
	Our changing demographic profile opens up increasing opportunities for baby boomers—those of us born between 1945 and 1965—in the "active ageing" category. Looking around the Chamber, I see that we are well represented. However, those changes also present immense challenges, not least in preparing for the future. The reality, and perhaps the irony, is that as our society gets older, pensions increasingly become a young person's issue. In the next 50 years the number of people over pension age will increase by more than half, meaning that there will be only two people working for every one person in retirement, compared with four working people today, and 10 working people 100 years ago.
	The cost implications of that increasing longevity for our children and grandchildren are arrestingly stark. Many more people expect to be active longer in retirement and need the resources to fund that. Unless we act now, and act decisively for the long term, we will bequeath a nightmare for future pensioners plunged into poverty, and for future taxpayers grappling with the consequences. We have already addressed some of the issues identified by Lord Turner's commission. We have legislated for a simpler, fairer and more generous state pension system. In addition, about 75 per cent. of women retiring in 2010 will receive a full basic state pension, and by 2025, over 95 per cent. of men and women will retire with a full basic state pension.

Chris Mullin: Does my right hon. Friend have any plans to address the difficulty faced by the other 25 per cent., or whatever it will be? If his answer is that that is too costly to address at the moment, can he tell us what the cost and the likely difficulties are?

Peter Hain: I am grateful for my hon. Friend's question. As I indicated, we will move towards the 90 per cent. figure. We looked sympathetically—and I know that he takes a close interest in this—at Baroness Hollis's proposal, but when we considered the details, it proved costly and poorly targeted. The poorest women would be unlikely to benefit, first, because they would lose means-tested benefits such as pension credit and, secondly, because they could not afford the several thousand pounds needed to buy back their contributions. In addition, many of those who would benefit—we estimate 67,000—would be either expatriates or foreign nationals who worked in the UK, but retired abroad, including many wealthy men and women. We prefer to find a better-targeted way to help low-income pensioners in the UK, and I know that my hon. Friend shares that concern, especially regarding women pensioners.

Steve Webb: The Secretary of State made the valid point that expecting women to find thousands of pounds up front to pay for missing years and receive some pension would be prejudicial to poorer pensioners. In the past, however, his Department has allowed people to offset such contributions. If someone had to pay £2,000 to get £3,000 back, they would simply be paid the difference. The Government currently do so in a different scheme, so could that principle not be applied in this case?

Peter Hain: We have only done that in limited cases, but we are looking at it all the time. If we could find a way—we are open to suggestions, and we looked carefully and sympathetically, as I said, at Baroness Hollis's proposal—of targeting such a provision at women on low incomes, preferably living in this country, although that does not exclude others, that would be our priority. It is costly, however, to implement the proposal introduced in the summer by Baroness Hollis, who has long expertise in the area, to which I pay tribute.

Gisela Stuart: The Labour Government can be proud of what they have done for women, but the group of 30,000 to 40,000 women should be allowed to purchase their national insurance contributions retrospectively. We could limit access to people who do not live in this country by requiring residency of 20 years or so. I very much hope that the Secretary of State will look at the proposal sympathetically, because it is not as expensive as the Treasury fears.

Peter Hain: My hon. and learned Friend the Minister for Pensions Reform will continue to look at it. There are circumstances in which up to 12 years of contributions can be purchased in the current period. Within a few years, the new regime for which we have legislated will deal with the historical but anachronistic discrimination against women in our state pension system. As my hon. Friend suggested, I am proud that we are addressing that.

Kelvin Hopkins: My right hon. Friend touched on the problem, as he put it, of affordability, but in a rich society I doubt that that is the case. Will he look at the tax breaks on savings given to the rich, which amount to at least £20 billion—some people think the figure is even higher? If we took some of that money we could overcome all the problems of affordability without much difficulty.

Peter Hain: My hon. Friend ought to address taxation matters to the Chancellor. However, if the question was as simple as that, I think that it might well have been addressed already.

Kali Mountford: Before my right hon. Friend moves on from the subject of women in low-paid work or without work at all, may I ask him whether he has had the chance to consider women who have more than one low-paid job? Each job might pay less than the national insurance level, but collectively the jobs might pay enough for the national insurance stamp. If such women had the opportunity, they might pay the national insurance contribution. I have raised the issue in the House before. Has the Secretary of State had an opportunity to consider whether we could change the regulations so that such women could pay their contribution?

Peter Hain: My hon. and learned Friend and I are aware of my hon. Friend's point; I know that she has championed the interests of that group. We will keep the issue under review and continue to consider it. We are not unwilling to do anything about it, but finding a way to target the issue appropriately is the problem. We shall certainly keep it under review and will be happy to continue to discuss it with her.
	A guaranteed basic standard of living for pensioners forms the platform of our side of the renewed contract between the state and the individual, but we need to go further. We will restore the link to earnings, abandoned by a previous Conservative Government, by 2012. By 2050, the basic state pension will be worth more than twice as much as it would otherwise. That, in addition to the reforms to the state second pension, will ensure that people retiring in 2050 who have worked or cared for about 40 years will receive about £145 per week of state pension in today's earnings terms.
	We also want to strengthen provision to support existing occupational schemes by simplifying the rules governing them through a rolling deregulatory review. The decline in private sector occupational pension provision since the late 1960s is serious, and in the face of increasing costs employers have been abandoning their defined benefit—that is, final salary—schemes, whose active membership numbers have fallen from 8 million in 1967, to 5 million in the 1980s and 1990s, to fewer than 3.5 million today.
	We want to reduce the burden on current pension schemes by reducing the revaluation cap on deferred pensions to 2.5 per cent. from 5 per cent., saving the industry, over time, an estimated average of £250 million a year, to encourage as many final salary pension schemes as possible to remain in existence. Importantly, that would apply only to rights accrued after the change; anyone who has already deferred a pension would be unaffected. Any rights built up by existing members until the point of any change would also be subject to revaluation under the current regime. That is a reasonable step to take. At the very least, it sends a strong signal of our intention to reduce burdens on current schemes, encouraging employers to keep existing defined benefit schemes open while protecting the needs of employees.
	The deregulatory review will not, of course, end there. We will also work further with the industry on some of the more complex issues and continue to seek out and cut unnecessary burdens, encouraging employers to keep schemes open while balancing the needs of the employee.

Joan Humble: Although the legislation proposed today will enormously benefit the millions of workers who do not currently have pensions, there is a concern for the people about whom the Secretary of State has just been talking—those who have a pension scheme from their employers. Those employers may use the opportunity of the new personal accounts to level down employees' pensions and reduce their contributions to the 3 per cent. proposed. What measures will my right hon. Friend take to ensure that that does not happen and that those employees are protected?

Peter Hain: I am glad that my hon. Friend has raised that matter because it allows me to put on the record reassurances that I hope she and others, including Opposition Members who have raised the issue too, will welcome.
	Importantly, there will be a ban on transfers between existing pension schemes and personal accounts; people will not be able to move in and out according to their whims. The personal account scheme will have an annual contribution limit. Employers with good existing schemes will be encouraged to continue to offer them via a simple and straightforward qualification test, and we are helping them to adjust to the new minimum employer contribution requirement by phasing that requirement in over three years.
	We have done some survey work on this question on behalf of the Department, and that suggests that any danger of levelling down will be very limited. Among employers who are already making contributions of 3 per cent. or more, the overwhelming majority—86 per cent.—plan to maintain or even increase contributions for current employees, and half intend to maintain or increase contributions for new employees. Employers will not suddenly go down-market, as it were, and discount their contributions if they have been substantially larger than the personal account's 3 per cent. minimum—it is a minimum, by the way, not a maximum—because they will then quickly find that they cannot recruit and retain their employees. Having a good pension is a valuable recruitment mechanism, especially in today's world.

Hugh Bayley: As a former social security Minister, I am extremely pleased that the Government are moving towards a situation whereby it becomes the norm that employers pay pension contributions, but I worry whether 3 per cent. is enough to provide the sort of security that many people will require in retirement. What percentage of final income would a person on an average income have if the employer made a 3 per cent. contribution and an 8 per cent. contribution was made in total throughout that person's employment?

Peter Hain: I am grateful for my hon. Friend's general support. This is a defined contribution scheme, not a defined benefit scheme, so I am not in a position to say what the final income would be. As regards the 3 per cent. figure, with tax relief and the individual's contributions, their minimum contributions would effectively double. That is a considerable boost to retirement income. The 3 per cent. figure was a consensus that came out of Lord Adair Turner's review and the wide consultations that were carried out on behalf of the Government, including with the Pensions Commission. This is an essential floor on pensions for the future without which we face dire straits indeed.

Oliver Heald: Does the right hon. Gentleman accept that the average payment that employers make into final salary schemes is 14 per cent., and the average for defined contribution schemes is 6 per cent., yet only 3 per cent. is being proposed for the personal account? Does not that raise the concern that everything needs to be done to make it easy for employers to enrol people automatically into those better schemes? What is he doing about the European rules that are creating such a problem for group personal pensions?

Peter Hain: I am not sure about the hon. Gentleman's 14 per cent. figure, but I will certainly have a look at that. Let me deal with his final point on workplace personal pensions and the European directives. We are not satisfied that the European consumer protection legislation permits automatic enrolment into workplace personal pensions, and we are seeking clarification on that or, if need be, amendment of the directives to permit such enrolment. In the meantime, we are exploring a practical solution with the industry. However, in any such solution that my hon. and learned Friend and I seek to agree with the industry, I do not want in any way to undermine personal accounts. That is Lord Turner's view and the view of the chairman and chief executive of the personal accounts delivery authority. Working with the whole industry and all stakeholders, we are seeking to ensure that we get the best possible outcome. First, nobody has said that the Bill does not propose the consensus solution, because it does, and secondly, nobody has come up with a better, more affordable option. We have to work together with stakeholders to ensure that this works.

John Greenway: The Secretary of State is reassuring on the levelling down of contribution amounts. However, for many of us, the more critical question concerns the continuing drift of the level of contributions paid by employers out of defined benefit schemes into defined contribution schemes. Is his mind still open to the suggestion from the Association of Consulting Actuaries that there should be new indexation arrangements that would allow more defined benefit schemes to continue, not only for existing members but for future members? Many young people will not enjoy the same pensions as our generation—which he mentioned—unless something is done.

Peter Hain: I agree with the hon. Gentleman that the slippage—it seemed at one point that it might be a haemorrhage—from defined benefit and final salary schemes to defined contribution schemes needs to be arrested. I hope that with the deregulatory review—this is the industry's view, and I expect it to deliver on it, given that we are making life easier and providing an extra £250 million in funds for pension schemes—we will see a stop put to that and will keep final salary schemes and defined benefit schemes as much as possible.
	On the ACA's proposals, we obviously continue to consider all those things. The matter was raised with me at a dinner with representatives of the pensions industry, when one representative asked whether I was strongly in favour of the risk-sharing alternative. The rest of the representatives, who were reasonably representative of the industry, turned on the man who asked me the question and said, "No, we don't want to have anything to do with it." I believe someone is looking into that. Obviously, we will continue to consider everything.

Harry Cohen: The Secretary of State has acknowledged that he does not know what the outcome rate will be—that is, the pension that an individual who contributes will receive at the end of the day. It may well be that 3 per cent. is insufficient as an employer's contribution. There certainly was not consensus on whether that was the right amount. There was not enough information. Why is the figure of 3 per cent. set in stone in the primary legislation? Why was it not introduced as a regulation, which can be more easily altered if the circumstances demand it? Did the Secretary of State cave in to the CBI?

Peter Hain: I understand my hon. Friend's point, which he made in an appropriately vigorous manner. He has been a champion of pensioners for a long time. As I said, the figure was a consensus figure. The industry was concerned that it should be in the primary legislation. To move forward in a fashion that enabled a serious prospect of getting some 7 million people without an occupational pension scheme into personal accounts, we needed to take the industry with us. That is where we are. That is the nature of delivering our proposals. Of course, we will keep the position under review. My hon. Friend should continue to make his points with his customary vigour, and I look forward to that experience.

Adrian Bailey: Does the Secretary of State agree that one of the best ways to ensure the maximum pension entitlement is ultimately to try to drive down the administration costs of the pension schemes? The potential economies of scale involved in the proposals offer that opportunity. Will the Secretary of State outline what progress he is making in that area to maximise the potential benefit for millions of people in the future?

Peter Hain: My hon. Friend makes a fair point. That is why the scheme is designed to reduce the administrative costs and to provide a simple scheme so that the benefits go to the people who need them. I am sure that he will see that as the debate on the Bill unfolds.

Graham Stuart: Does the Secretary of State agree that over time the salary levels of employees will be adjusted to accommodate the 3 per cent. contribution from employers? That will mean that employers will not make the contribution in reality, even though they might technically do so—it will come out of the remuneration that would otherwise have gone to an employee.

Peter Hain: Obviously—in the sense that any enterprise's bottom line includes all the costs, such as employer contributions. However, it does not follow that the money would have gone on extra salaries. The 3 per cent. figure becomes 8 per cent. in the context of the total contributions to funding the scheme.
	All the progress that we have made in cutting unnecessary burdens and encouraging, as I was pressed to do, people to keep final salary schemes open, while balancing the needs of the employer, is important and will help, but will not provide the full answer to the issues that Lord Turner and his commission raised.
	There is a serious problem of undersaving, with perhaps as many as 7 million people not saving enough to fulfil their aspirations in retirement. Unless that is tackled, a chasm will grow between the income that they want and that which they receive in retirement. There are many reasons for people not saving. Many on low incomes or with broken working patterns do not have access to a workplace scheme. Some will be put off by the complexity of pensions while others will simply live for today. Some will lack confidence in pensions. That is why the Government set up the Pension Protection Fund, which safeguards more than 10 million memberships of eligible defined benefit occupational pension schemes throughout the UK. It is why we established a more powerful pensions regulator and delivered, through the financial assistance scheme, a fair and just settlement for 140,000 people who were robbed of their pensions.

Julie Kirkbride: The Secretary of State knows that many of us were disappointed that there was no statement on the new deal for the financial assistance scheme category of people. Those who have written to me—many in UEF and other companies such as Kalamazoo—who lost their pension would still like greater clarification of the 90 per cent. and of how much of the pension that they would have received will be covered by the Secretary of State's scheme. I would be grateful if the right hon. Gentleman clarified that on the Floor of the House now.

Peter Hain: I shall happily remind the hon. Lady of the key points. A written ministerial statement was made to the House, and she is free to send it to her constituents. However, let me highlight the points that may help her. All scheme members will be guaranteed 90 per cent. of their accrued pension. There will be increasing payment of assistance based on the post-1997 service, in line with inflation. Assistance from the scheme's normal retirement age provision will be paid, subject to a lower limit of 60. Members will be allowed to take part of their pension as a lump sum. Assistance will be extended to members of schemes that wound up underfunded and, of course, dependants will benefit in the way that was intended. That is a good package in the circumstances. As I said, the hon. Lady can send the details from the written ministerial statement, which was tabled just before Christmas.

David Drew: My hon. and learned Friend the Minister for Pensions Reform, who is sitting next to my right hon. Friend, will not be surprised if I mention the continuing problem of the small group of pensioners, such as those from Desmond's, who fall between the FAS and the Pension Protection Fund. Is there any clarity, following Andrew Young's observations, on whether there is a need to try to remove that gap? Will we have to formulate primary legislation on the matter or can action be taken through regulation so that the group does not remain disadvantaged?

Peter Hain: Obviously, we are still considering the matter. I know that the points have been made to my hon. and learned Friend. We will examine them and my hon. and learned Friend has offered to discuss them with my hon. Friend to take his concerns forward.

Kelvin Hopkins: My right hon. Friend mentioned the millions who are not saving for their retirement. He made a public statement today about the importance of personal responsibility. Is not the reality that millions of people will not be induced or exhorted to save and that, in time, we will have to establish a state compulsory savings scheme, which guarantees that people not only save but know what they will get when they retire?

Peter Hain: Automatic enrolment is the radical change that we are introducing. We do not need to be patted on the back, but the proposal deserves applause. Automatic enrolment will take place for the first time, and it will be difficult not to enrol. People will have to be crystal clear that they would be better off not enrolling—for example, if they are coming up to retirement, enrolment might affect their pension credit. This is a major change, and my hon. Friend should recognise it.

Julie Morgan: I want to take this opportunity to congratulate my right hon. Friend on the written statement before the recess. It is regrettable that there was not an opportunity to make a verbal statement, which would have allowed me to say how pleased I am that that long-running saga has ended. Is he aware that during the holidays I received many telephone calls from ex-Allied Steel and Wire employees in Cardiff, who said how pleased they are that we have finally secured that achievement?

Peter Hain: My hon. Friend has been a ferocious champion on behalf of the Cardiff ASW workers, as have many of my hon. Friends. It would have been nice to make an oral statement—my hon. and learned Friend the Minister for Pensions Reform and I would have been delighted, if it had been possible—and we were deprived of the opportunity of being congratulated by my hon. Friend and other hon. Members.

Frank Field: Earlier, it sounded as though hon. Members were going to be slightly crabby about the success that the Secretary of State, the Minister for Pensions Reform and staff elsewhere have achieved with the settlement. I do not want that event to pass—perhaps I will catch Mr. Speaker's eye later and be able to say more—without saying that the Secretary of State and his team have delivered what previous Secretaries of State and their teams failed to deliver to that group of workers, and we should put on record what an achievement that is.

Peter Hain: rose—

Chris Ruane: Answer that.

Peter Hain: I am grateful to my right hon. Friend for that comment, because he is not prone universally to congratulate the Government on everything that we do.

Madeleine Moon: In my constituency, 4,000 people receive pension credit, which affects more than 5,000 families. How can we ensure that people, many of whom are in low-paid jobs, are prepared for saving and are equipped to deal with the impact of saving further reducing their income in order to allow them to prepare for retirement?

Peter Hain: That is the fundamental objective of the Bill and of the policy that will be delivered around it. My hon. Friend is right; like her, many of my constituents had low incomes when they worked, and life in retirement would have been dire for many of them without the pension credit. Life was dire for such people before 1997, but they have had a major increase in prosperity since then. We must join together, because the consensus around the Bill, which was assembled carefully, has been important in taking the Bill forward.

Angus MacNeil: Will the Secretary of State consider ways to remove the disincentives on personal responsibility? Perhaps he should consider Help the Aged's idea of at least investigating an income disregard scheme, which would allow the maintenance of some means-tested benefits. Many people at the margins feel that pensions involve robbing Peter to pay Paul.

Peter Hain: That proposal is being kept under discussion with Help the Aged, which, as the hon. Gentleman knows, has been very supportive of the Bill and is keen that it gets through the House as quickly as possible. Its proposal has significant cost implications, which must be borne in mind.
	Of those of working age, around three quarters say that they will need more than the state pension to live on, yet only around 40 per cent. of those who have not yet retired are saving in a private pension. We must get to the point at which saving becomes the norm and a savings culture is embedded in society in general and in the young in particular. Sixteen per cent. of 20 to 24-year-olds are saving for a pension, compared with about half of those aged over 35. Less than half of moderate to low earners with incomes from £5,000 to £35,000 are saving towards a pension, compared with three quarters of those earning more than £35,000. Automatic enrolment into a qualifying pension scheme introduces for the first time such a presumption to save. Evidence suggests that automatic enrolment is one of the most effective ways to combat people's tendency not to act when faced with difficult financial decisions. It also has the greatest impact among groups where participation rates are the lowest.
	The Bill will introduce a mandatory duty on employers automatically to enrol their workers into a qualifying pension scheme. Many employers are already making substantial contributions to pension schemes and supporting their employees in saving for retirement. To make the package of reforms successful, however, the Government need all employers to play their part. That is why all employers will be required to contribute to their workers' pensions a minimum of 3 per cent. on a band of earnings for defined-contribution schemes, as recommended by the Pensions Commission.

Nick Palmer: We are all concerned that employers in marginal industries do not pressurise their staff to opt out. Is it not an incentive to employers to do so that if an employee opts out, the employer's contribution also falls away? If an individual decides to opt out, it would be better if no financial benefit were to result to the employer because of that decision.

Peter Hain: Despite the best intentions of legislation, it is sometimes difficult universally to enforce rights such as those introduced by this Government on the minimum wage and employment rights, and my hon. Friend has alluded to that problem with regard to small employers and small businesses. However, there will be a legal duty on employers, who would disobey the law and who would be liable to prosecution if they were to use an underhand method, such as recruiting somebody on the basis of a nod and a wink that they would not be in a pension scheme. If that were to happen, that employer would breach the law. It will be difficult to opt out unless there is a good reason to do so.

Sally Keeble: Will my right hon. Friend explain what will happen on empty hours contracts and on employers who deliberately structure contracts to ensure that people do not qualify in order to get round the measure?

Peter Hain: The Bill includes various restrictions on contracts. Zero hours contracts, especially as they apply to migrant workers, are a curse on too many communities around the country. Such contracts result in people turning up to work in the morning, only to find that there is no work and that there is no obligation to provide it. A pension would clearly be affected by such a situation, which reinforces our duty to ensure that the law is enforced. The law will be clear after the Bill is enacted.

John Penrose: The Secretary of State has discussed what he hopes will be the effectiveness of automatic enrolment in getting more people to become part of schemes, but is he concerned that it will affect some of the wrong groups of people? He has mentioned those in the early stages of their working career, for whom such a scheme might not be a sensible financial decision. The Government are trying to get round that problem with generic financial advice, but does he agree that there are currently no examples anywhere else in the world of generic financial advice provided with the level of detail and on the scale required to make the system work properly in the UK? If he cannot make the system work in the UK, what is plan B?

Peter Hain: I am going to deal with that problem in a few minutes, and the hon. Gentleman can come back to me at that point. We are doing something very radical; I do not think that there is anything like this anywhere else in the world, which is why it is so important to get it right and deliver it with the maximum consensus.
	As a result of our reforms, between 6 million and 9 million people will either be newly saving in a workplace pension or saving more than they would have been. That includes more than 1 million people currently in workplace pension schemes who are getting either nothing or less than 3 per cent. from their employer. We anticipate that up to 7 million individuals may join the new national scheme of personal accounts. It will be a simple, low-cost pension saving scheme targeted where the need is greatest: moderate to low earners currently without access to a workplace pension scheme.
	The scheme will have low charges, allowing employees to keep more of their savings, and their contribution, combined with that of employers and tax relief from the Government, means that their own pension contributions will be at least doubled up front. All employees will now have the chance to save, and having a pension will be the norm. That will transform the savings culture in the UK, boosting overall pension contributions by around £10 billion annually by 2015. Automatic enrolment into a pension scheme is widely recognised as the most effective way of combating inertia and myopia.
	About one in six employees are working for firms that already offer automatic enrolment, which include some of the most highly respected companies in the UK. The Bill will extend that opportunity to those currently without such access. We recognise that designing and delivering such a pension scheme is not a job for the Government and therefore we have set up the personal accounts delivery authority—PADA—to advise on, design and bring about the implementation of the reforms. We intend to extend the remit of PADA to enable it to design and build the infrastructure for the personal accounts scheme. We will also ensure employers' compliance with the new duties through the pensions regulator, who has proved to be a very effective regulator of UK occupational pensions over the last two years. The regulator is best placed to deliver an effective compliance regime that does not overburden employers. It will be a light-touch regime, but it will deal effectively with those who refuse to comply.
	Politicians from all parties are often accused of putting too much emphasis on sending messages, but it is important that a clear message from the whole House is sent to those who may not face retirement for decades but who need to prepare for it now. That is why maintaining the consensus that was built up on pension reform—a greater degree of consensus than on virtually any other complex policy issue in my experience—is so important. If people are to have the confidence to invest in pensions for the future, they need to know that the rules of the game will not be changed by a future Government. Help the Aged, the Equality and Human Rights Commission and Age Concern, as well as key representative bodies such as the Engineering Employers Federation, the TUC and the National Association of Pension Funds, have publicly acknowledged and emphasised the importance of maintaining the consensus.
	I read that the hon. Member for Epsom and Ewell (Chris Grayling) has "reserved his position" on the Bill, hinting that he and his party may ultimately vote against it. I say to him that we all have a duty to place the long-term interests of future pensioners ahead of short-term party positioning. It would be simply reckless for the Conservatives to abandon the hard-won consensus on pension reform and vote against the most momentous change in pensions since the introduction of the state pension a century ago.

Chris Grayling: The Secretary of State just quoted the National Association of Pension Funds at my party. Let me quote it back at him. It believes that without addressing the means-testing issue and its interaction with automatic enrolment, the Government could undermine the whole reform process. Does the Secretary of State accept that he still has work to do?

Peter Hain: Is the hon. Gentleman saying that because of an argument over what has been described by the CBI as a finer detail of the Bill, he is going to vote against it? If he is going to, may I ask him why he has broken with the consensus established by his predecessor, the hon. Member for Runnymede and Weybridge (Mr. Hammond)? On 9 May, he said to the  Pensions Age conference:
	"Despite the obvious scope for political point-scoring in an environment where long-term, and sometimes difficult, decisions have to be taken, the Opposition is ready to engage in a consensus building exercise".
	The hon. Member for Runnymede and Weybridge also said, on GMTV, that the Conservatives would not vote against the Bill because they wanted to see the consensus maintained. I fear that the hon. Member for Epsom and Ewell likes grabbing headlines, but not looking at the long-term interests of pensioners in this country.

Chris Grayling: Does the Secretary of State believe that it is important, as the House debates this measure, that it gets the Bill right?

Peter Hain: Of course it is important that we get it right, but I want to know whether or not the hon. Gentleman will support the Bill. If he has lit upon what has been described by the CBI as a finer detail of the Bill, he can move amendments in Committee, and they will be considered by Ministers. But is he saying that if he does not get 100 per cent. of whatever he is proposing—no one has the faintest idea what he is proposing, and I am not sure that he does—he will sabotage the consensus on the Bill? In the  Financial Times on 6 November, the chief executive of the National Association of Pension Funds, Joanne Segars, said:
	"Personal accounts provide an opportunity for millions of people who will benefit from them to save for retirement for the first time. It would be a pity to see that damaged by people unnecessarily breaking the consensus."
	In the  Financial Times on 7 November, the CBI deputy director general, John Cridland, said that it is important that pension reform should not be derailed because of
	"a difference of opinion over the finer details of the bill."
	I could go on. I could quote the hon. Gentleman's predecessor, who adopted a far more constructive attitude, but I shall spare him the embarrassment.

Graham Stuart: Will the Secretary of State give way?

Peter Hain: I would like to make some progress, and if necessary, I shall give way if the hon. Gentleman feels that any points have not been answered.
	Pension stakeholders from the City are clear: the promise for future pensioners embodied in this Bill must not be put at risk by disagreements about the finer details, still less by political posturing.

Quentin Davies: What we have just heard from the Opposition is really quite extraordinary. Has it not been the clear rule in this House for generations, and indeed for centuries, that a vote against a Bill on Second Reading is not a disagreement with its detail, but a disagreement with and rejection of the principle of the Bill? It is quite clear that the House is confronted by an Opposition who reject the very principle of the Bill. Otherwise, a vote on Second Reading has no meaning. They want to kill it at the outset. They do not want it to get into Committee, they do not want to look at the details and they do not want to improve it. They have made that absolutely clear this afternoon.

Peter Hain: I am not sure whether the Opposition are going to vote against Second Reading. I am grateful to my hon. Friend for his intervention because it comes from an authoritative source.
	The hon. Member for Epsom and Ewell seems to be backing away. He likes to grab a headline by threatening to vote against the Bill, as he does the whole time, through his spin on various policies, but now he is confronted with a decision, it will be interesting to see what he does in the Lobby. He seemed to indicate in the  Financial Times today that he was not going to vote against Second Reading, but he is also continually seeking to derail the progress of the Bill. He may vote against it on Third Reading—who knows?
	Before closing I want to address head-on the issue of means-testing and whether it pays for people to save, which was raised earlier by the hon. Member for Weston-super-Mare (John Penrose). The hon. Member for Epsom and Ewell raised questions on this point in the  Financial Times today. He previously proposed a refund of contributions for those people who get less means-tested support in retirement because they have contributed to personal accounts.
	I ask the House to keep in mind three points. First, our pension reforms lead to less means-testing rather than more. Secondly, those who receive means-tested benefits should still be better off in retirement if they save. The Government's creation of the savings credit, together with the right for all to take a pension lump sum, ensures that. Thirdly, nobody can be sure which individuals will end up needing means-tested support. What we can say is that few aspire to that, so we must say with a united voice that the downside of people not saving outweighs the small risk of their saving and later regretting that in 30 or 40 years' time, when individuals might be in who knows what predicaments.
	I also have one simple question for the hon. Member for Epsom and Ewell. Does he stand by his announcement regarding a scheme of refunding contributions or has he recognised that such a scheme would result in chaos and threaten not just Government finances, but the finances of pension schemes throughout the country?

Graham Stuart: I am grateful to the Secretary of State for giving way. A lot of the misgivings that hon. Members throughout the House feel about the Bill are to do with punishing those with least who have saved when it is not in their interests to save. The Secretary of State has just said that everyone will be better off from having saved, including those on means-tested benefits, but that is not true of everybody. That gets to the nub of my misgivings about the Bill, namely that some of the poorest and most vulnerable people will put money in, but see either no benefit or so little that they would have been better off not investing in the first place. Will the Secretary of State address that point head-on?

Peter Hain: Obviously if an individual was in a position where pension credit would be forthcoming a short time before retirement—the default position, as it were—it would not be in their interests to contribute to a personal account, and they would sign the form to opt out. That is just common sense. However, what I do not understand about the Opposition's line of attack is this. The hon. Member for Epsom and Ewell is talking about a situation 25, 30 or 40 years ahead, but what is he saying? He is saying, in effect, that we should simply just leave it to the taxpayer, and start a scare almost—that is what the Opposition are doing with all this noise—and thereby discourage people on low incomes from contributing. Those people will then end up in a worse situation and the taxpayer will have to bail them out, unfunded and at an unpredictable level.
	The hon. Gentleman also does not take into account the proposals on trivial commutation—that is, to switch some of the contributions into a lump sum of potentially £16,000, an amount that could be kept under review. In other words, by all means let us debate the detail, but let us not use that as an excuse to derail the progress of the Bill.

John Penrose: I should like to press the Secretary of State on the point about generic financial advice. The Government have sought to use generic financial advice as a way of helping people to decide whether they will be better off and therefore whether they should exercise their right to opt out; obviously we hope that relatively few of them will. Is he saying that because everything is 25 years in the future, particularly for people who are under 21 or 24 years old, the decision is all too hard and that it does not really matter? If not, can he please tell us what he plans to do if the pilots of generic financial advice—I presume that there will be pilots—prove not to give people satisfactory levels of information and not to improve the generally terrible levels of financial literacy in this country, and if people therefore start taking the wrong decisions? Will he ignore that or does he have a plan B?

Peter Hain: It is not a question of ignoring the issue. The hon. Gentleman makes some fair points about financial illiteracy about pensions and other things. These are complex matters. Indeed, Otto Thoresen is looking at precisely how we can offer generic financial advice, in co-operation with the industry generally, including with the Association of British Insurers, the National Association of Pension Funds and others. If the hon. Gentleman wants to make any points about that, I would be happy to consider them.

Julie Kirkbride: I am grateful to the Secretary of State for giving way again. We on the Conservative Benches take the issue seriously, for the reasons that have been eloquently set out. It is also fair to our position to say that some difficult questions arise as a result of the Government's plans with regard to benefits. Can the Secretary of State explain to the House how the Government's promises on the minimum income guarantee, which rises in line with earnings, are consistent with encouraging people on very low earnings to save today for a pension scheme in 10, 20, 30 or 40 years' time?

Peter Hain: It is because people who contribute to the personal accounts will be better off. The position that the hon. Member for Epsom and Ewell has adopted represents a breach with that of his predecessor, the hon. Member for Runnymede and Weybridge, who I think understood the impact of the savings credit—the hon. Lady needs to look that up—to reward pensioners on low incomes who have saved for their retirement, which contrasts with the situation that we inherited. I still do not understand, first, why the hon. Member for Epsom and Ewell has changed his party's position from that adopted by his predecessor, who supported the Bill—he has provided no explanation for changing it, except opposition for opposition's sake—and, secondly, what the alternative policy is. Logic suggests that the alternative policy is to say, "Well, it's up to people just to take their chances. They'll have the safety net of pension credit, but they won't contribute to their own pensions and they won't have the chance of getting a much better pension outcome," which also answers the hon. Lady's question.

Harry Cohen: The Secretary of State made an interesting point about trivial commutation, whereby people could collect up to £16,000 as a lump sum, rather than losing it in a means-testing arrangement. That is worth knowing, but I am concerned that a lot of that money could be eaten up when housing benefit or council tax benefit is taken into account. Would my right hon. Friend be prepared to consider tabling an amendment in Committee, so that that lump sum could not be taken into account when assessing housing benefit and council tax benefit?

Peter Hain: As my hon. Friend knows, there is already a £6,000 disregard to help in that respect. Clearly there are some individual circumstances—the situation with regard to housing benefit is an important dimension to all this—that need to be considered carefully.
	I was just reflecting on the intervention that the hon. Member for Bromsgrove (Miss Kirkbride) made and on her apparent attack on the minimum income guarantee. It is not clear to me whether it is the Opposition's position to stop uprating the minimum income guarantee in line with earnings, which would plunge pensioners into even more poverty.

Chris Grayling: This issue can be best distilled in one simple question: will it be possible for an individual on low pay to put aside £25,000 for retirement and end up no better off for having done so?

Peter Hain: Is it possible for anybody to save for their retirement through a pension scheme of one kind or another—a workplace scheme, an occupational scheme and so on—and end up not being as well off as they expected? Of course it is. Is it a consequence of the Bill that people will automatically not be as well off? No. [Hon. Members: "Yes!"] Ah! I see, there we have it. So, the hon. Gentleman is objecting to the principle of automatic enrolment, is he?  [ Interruption. ] Well, what is he objecting to, then? He is not objecting to the principle of automatic enrolment, but why did he jump up and down and shout about it? Is he suggesting, then, that taxpayers should simply foot the bill? Having previously supported the Bill on a completely consensual basis—his predecessor expressly said on 19 November 2006 that his party would not vote against it—the Conservatives are now abandoning that position.

Chris Grayling: This is a serious issue.

Peter Hain: The serious issue is the one to be explored in detail in Committee. The serious issue is not to create a froth of indignation that provides a pretext for voting against the Bill, as the hon. Gentleman has threatened to do, or for seeking to derail its progress. This is historic, landmark legislation, but the Opposition have not come up with one practical alternative to the broad perspective laid out in the Bill.

Joan Humble: Will my right hon. Friend give way?

Peter Hain: I think that this had better be the last occasion on which I do so, because I have taken up a great deal of time.

Joan Humble: I thank my right hon. Friend. I speak as one who fully supports the legislation.
	My right hon. Friend will recall the Work and Pensions Committee's suggestion that the Government examine the system in Sweden, where people receive an orange envelope every year containing details of their entitlement in relation to a variety of pensions. Six or seven years ago, the Government legislated for an annual report on pension projections. Will he consider adopting the Committee's recommendation in order to reassure people about the benefits of investing in personal accounts and pensions, and to proceed with his reforms?

Peter Hain: That is an attractive proposition and I will consider it, although I am not sure what the pension providers would make of it. I understand that Sweden has only one state pension scheme, and does not have the variety of pension provision that we have in this country.
	I shall now bring my speech to a close. I have responded to a good many interventions, but I have spoken for quite a long time as well. I said at the outset that we were renewing the contract between the Government and the individual on the basis of shared responsibilities in the most fundamental reform of the pensions system since the state pension was inaugurated in 1948. Looking back further, I note that 2008 marks 100 years since Lloyd George's Old Age Pensions Act, which resulted in a non-contributory pension of five shillings a week payable to those aged over 70—subject to a means test.

James Plaskitt: If anyone lived that long.

Peter Hain: Very few did.
	This Bill, alongside its predecessor, will be considered equally historic. It is a blueprint for a new understanding between individuals, employers and the state, which will give all workers the chance to take control of their own retirement, providing for themselves and their dependants. These radical reforms are necessary to the establishment of a sustainable, affordable and trusted pensions system, which will meet the needs of the country and future generations by delivering security and dignity to all in retirement on the basis of new responsibilities: employer responsibility through contributions to a pension scheme, employee responsibility through employee contributions to the scheme, and Government responsibility through an improved state pension linked to earnings.
	I commend the Bill to the House.

Chris Grayling: It was disappointing to hear the Secretary of State demonstrate so little understanding of what are serious issues. Later, I shall explain in detail why we are so concerned about the aspects of the Bill that we have been discussing.
	Yesterday, the Secretary of State issued a press release warning of the danger of a future pensions crisis. Has he not noticed that, under this Government, we have experienced a pretty significant pensions crisis for the past 10 years? When the history of the Government is written, their stewardship of our pensions system will be remembered as one of their greatest failures. Indeed, the word "pensions" should be chiselled in large letters on the Prime Minister's eventual political tombstone.
	In 1997, the Prime Minister took over what was widely regarded as one of the strongest pensions systems in Europe. Although the right hon. Member for Birkenhead (Mr. Field) and I regularly engage in discussions about what took place before that, the reality is that in 1997 we had a strong pensions system. The then Chancellor, now the Prime Minister, made grandiose promises about how it would transform the lives of our pensioners, and—just for a change—the opposite happened. Millions fewer people are saving for retirement, the latest Government figures show that the poorest pensioners are getting poorer, and we have a system of means-testing so complex that many elderly people do not know how to gain access to the money that they need. We have seen that once strong pensions system damaged beyond repair, and we have seen the Government's great response—their first response—to the pensions crisis, stakeholder pensions, fail before even taking off.
	Although today's debate concerns an important set of reforms and although the principle underlying those reforms should and does command support throughout the House, when the Secretary of State boasts about his plans we should remember that the debate is all about recovering 10 lost years, and about reviving a culture of saving that has been systematically destroyed since 1997. The Government's track record on pensions contains nothing that they can be proud of.

Hugh Bayley: If the 1997 pension scheme was so good, why were millions of pensioners in poverty, and why are fewer in poverty now?

Chris Grayling: Is the hon. Gentleman proud of the fact that the Government's most recent figures show that the poorest pensioners are getting poorer?
	Let me be fair to the Secretary of State, and give praise where it is due.

Hugh Bayley: rose—[Interruption.]

Chris Grayling: No, I will not sit down.

Hon. Members: Ooh! Cheeky!

Madam Deputy Speaker: Order.

Chris Grayling: I want to praise the Secretary of State. I want to echo the words of the right hon. Member for Birkenhead. We can engage in debates and exchange banter across the Chamber and we can discuss points of disagreement, but I genuinely congratulate the Secretary of State. He deserves the House's praise for the way in which he faced down the opposition of both the Prime Minister and the Treasury to support a rescue package for the 125,000 people who lost out when their schemes collapsed. We know that it was not an easy job. We know that the Secretary of State had difficult internal hurdles to overcome. Clearly he cannot talk about those, but both he and the Minister for Pensions Reform deserve enormous credit for what they have done. They have made a real difference to the lives of a large number of people, many of whom we know because we have worked with them over the last few months.

Gisela Stuart: I am grateful to the hon. Gentleman for finally seeing the light and congratulating the Government on something good that they have done, but will he also acknowledge that this is essentially a sweeping-up exercise to deal with the failures involving occupational pension schemes and pensions mis-selling over which the Conservative Government presided? We have merely tidied up their mess.

Chris Grayling: I am afraid that the hon. Lady clearly does not understand the pensions system. Issues involving defined contribution pensions have nothing whatever to do with the collapse of direct benefit occupational pension schemes.
	In the wake of what has happened, I urge the Secretary of State to ensure that payments to the pensioners who lost out begin as soon as possible. He and I have talked about the practical difficulties of the way in which the financial assistance scheme is run. I think that we should give the claimants the benefit of the doubt, and start paying them as quickly as possible. I assure the Secretary of State that he will have our support if he can find a way of ensuring that that is done.

Peter Hain: I am grateful to the hon. Gentleman for his offer of support on this issue, at least. We will clearly need to change the regulations and, of course, enable the Bill to deliver what is necessary. The Bill will therefore need to be passed quickly, which means that the answer to the hon. Gentleman's question lies partly in his own hands.

Chris Grayling: We have not yet seen any of the details of the proposals, but we want to support the Bill, and we want it to be right. I hope that, in the spirit of consensus for which the Secretary of State argues, the problems can be resolved and the Bill can receive Royal Assent in a form that we can all applaud. That is certainly our objective.
	The Secretary of State has, of course, inherited a troubled pensions legacy for which he is in no way responsible, and I applaud him again for his work in sorting out some of the problems. The real culprit is sitting in No. 10 Downing street. The Secretary of State was not responsible for all the pressures on pension funds over the past 10 years, and indeed the Prime Minister was not responsible for all of them. Some developments, such as the fact that people are living longer, are outside the control of any politician or pension fund trustee. But—this is relevant to the point made by the hon. Member for Birmingham, Edgbaston (Ms Stuart)—there are two areas in which the Government have clearly had an impact on the fortunes of pension funds: taxation and regulation. In both those areas, the decisions made by the Prime Minister since 1997 have been the equivalent of a series of logs placed on the camel's back. No wonder the camel's back broke.
	The Bill represents the Government's second major attempt to sort out the mess that they have made of our pensions system. The last one, the stakeholder pension, proved to be a complete white elephant. The Bill consists of the final part of a set of reforms initiated after the Government called in Lord Turner to help them to find a way out of the mess.
	The House has already approved the changes to state pension arrangements. The establishment of new pension arrangements designed to persuade more people on lower incomes to put money aside for their retirement is clearly the right thing to do, so we support the establishment of personal accounts. However, the Government have built a long track record of grand announcements followed by failure to deliver, and these reforms are in danger of continuing that tradition. There are real issues in the detail of what the Government are establishing, and we—along with, I hope, Members in all parts of the House—will subject them to intense pressure so that we can put matters right as the Bill is debated in the coming weeks.
	Before I deal with the weaknesses, I want to make one thing clear to the Government. There is broad consensus about the direction of these reforms, but Ministers have used that consensus as a shield from serious debate, which is unacceptable and undermines the very concept of consensus. Anyone who challenges the Government over the detail is accused of undermining the consensus. That is true not just of debates in this House. People involved in the stakeholder briefings held by Ministers have told me that when they expressed concerns, they were warned about the risk of undermining the consensus. That is not good enough. Consensus has to be earned.
	If Ministers want the consensus to continue—I assume they do—they need to engage in constructive dialogue with, and listen to, everyone involved: maintaining the consensus is not just about insisting that everyone has to agree with Ministers. It is absolutely right and proper that Parliament and outside bodies debate these measures vigorously in the coming weeks. There are things about this Bill that are not right and more information needs to be published. Ministers need to respond constructively to suggestions and questions from both sides of this House. If they fail to do so, it is they and no one else who will be undermining the consensus.
	The Government could start by engaging in a proper and constructive debate about means-testing: everyone agrees that the problem has to be addressed. I have already quoted the National Association of Pension Funds' most recent document, which states that
	"without addressing the means-testing issue and its interaction with automatic enrolment the Government could undermine the whole reform process."
	The Association of Independent Financial Advisers has a letter in today's  Financial Times that says that
	"it is unacceptable that people who conscientiously save for their future could receive no benefit from being prudent. Because of means-testing, up to one in five future pensioners could effectively be worse off than those who opt out of personal accounts and choose to rely on state benefits."
	Age Concern states:
	"The interaction with means-tested benefits is not a reason to delay or reconsider the policy of auto-enrolment. However the Government should set up a review to look at the options and trade-offs."
	It is a matter of concern to all the organisations involved that, as yet, the Government are not engaging in constructive debate.

Nick Palmer: Is not the hon. Gentleman using the Government's progressive introduction of help for low-paid people as a weapon to criticise the further improvement of pensions? Is not it more reasonable to support means-tested benefits for those who are genuinely suffering hard times while supporting the Pensions Bill proposals for the broad scope of people who need to save for their retirement?

Chris Grayling: I do not think that many Labour Members understand the issue. Let us consider two people in identical circumstances. It is possible for one to save for retirement and put aside £25,000 and for one to do nothing at all and for them both to have an identical income in retirement. If Labour Members think that that is a good thing, I am afraid that I do not agree with them. This issue has to be addressed.

Richard Burden: I think that most Labour Members do understand the relationship between the two issues. My right hon. Friend the Secretary of State asked the hon. Gentleman a question earlier and I am still struggling to understand whether he has provided an answer. It is a question not of whether there is a relationship between means-testing and automatic enrolment and possible problems there, but of what he would do about it. What is he suggesting? I still have not heard anything from him on that.

Chris Grayling: If the hon. Gentleman will bear with me for a few minutes, I will address that issue.
	My concern is that if the issue is not addressed, the reforms will be launched with a huge hole below the waterline and I do not want the next Conservative Government to have to pick up the pieces. The problem is straightforward; the interaction between means-testing and these reforms means that some people who are encouraged to save for retirement, or are auto-enrolled to save for retirement, will derive no benefit from doing so because they will not be able to save enough money to provide them with a pension income that is greater than they would have received anyway from means-tested benefits. The point made by my hon. Friend the Member for Bromsgrove (Miss Kirkbride), who is no longer in her place, was that that issue will become more pronounced because of the link between earnings and the pension credit threshold. That is a fact; it is not a statement of intent one way or the other about the pension credit threshold increasing in line with earnings. We do not know how many people will be affected.

Mike O'Brien: I am listening in bewilderment. Today, one in six people are automatically enrolled into their pension schemes. Many of those who have been automatically enrolled today are on pension credit because their second pension has not put them above the levels to which they should be entitled. Is the hon. Gentleman now suggesting, as he did on Radio 4's "Money Box", that every pensioner in that position today and from here on would have to have their contributions refunded? Would every private pension scheme have to do that? Is that what he is suggesting?

Chris Grayling: The Minister has to remember that he is auto-enrolling people on low incomes on to pension schemes. The Secretary of State said that he was going to make it difficult for people not to auto-enrol.

Frank Field: It is really important for Labour Members to understand the point. There are difficulties now and my hon. and learned Friend the Minister for Pensions Reform made a legitimate point about people being "compulsorily enrolled" into existing employer schemes. Universal enrolment is a different ball game and I for one do not share this supposed consensus about how wonderful the reform will be.

Chris Grayling: I am grateful to the right hon. Gentleman, who speaks on these matters with great authority. I hope his colleagues on the Front Bench will listen carefully to what he said.
	We do not know how many people will be affected. The Pensions Policy Institute has made some guesstimates; it has highlighted particular at-risk groups, such as people in their 40s and 50s or people who will rent in retirement, who are said to be particularly at risk. But it seems pretty clear that the number of people who could lose out amounts to hundreds of thousands. I for one do not think that that is good enough.

Oliver Heald: Is it not also right to reflect on who these people are? They are people who, at the moment, do not save because they spend all their money on essential items. We are asking those people to make a sacrifice if they are to be part of the personal accounts scheme. They should not sacrifice essential items for nothing.

Chris Grayling: My hon. Friend is absolutely right. Interestingly, my next remark was to be precisely what the Minister just said; "Ministers will say that this is a problem for everyone who saves for retirement." This is different, because people are being auto-enrolled for personal accounts. The Secretary of State made it clear that he wanted it to be difficult for people not to auto-enrol.

Mike O'Brien: Let me just repeat for the hon. Gentleman's benefit that, today, one in six pensioners are automatically enrolled. It is a gold standard that we want to provide universally. That is not a major change. It is a change in numbers, but it does not change the basis of his argument. Is he saying that all those people who, under previous Conservative Governments and under this Government for the past 10 years, have been automatically enrolled into a pension scheme ought somehow not to have been automatically enrolled and should have some sort of compensation? Does this matter now have to be dealt with before he can accept that auto-enrolment has to go further?

Chris Grayling: I fear that the Minister still does not understand the issue. Parliament is legislating to auto-enrol everyone in this country who is not currently in a pension scheme in a system that the Secretary of State says is designed to make it difficult to opt out from. These are low-cost products in the pensions market. No one will be able to afford to provide these people with personal advice about whether they should or should not save. They have to take the decision themselves. We live in a country where, as we know, people have a propensity not to save.

Angus MacNeil: As people are saving for tomorrow, they will presumably have less money in the present. Does the hon. Gentleman anticipate that there will be any increase in Government support through mechanisms such as family tax credit to compensate for what people will lose in the present for their future savings?

Chris Grayling: The hon. Gentleman will have to ask the Secretary of State that question, or the Minister who will wind up the debate.
	We know that people in this country have a propensity not to save. By any current standard, the local authorities pension scheme offers attractive benefits, yet local authorities struggle to get all their employees to enrol. We can understand why: we are talking about people who are earning some of the lowest wages. Most people earning £12,000 a year would rather not put aside money out of a tight household budget each week to save for retirement.
	What will happen? Whatever I say, or Ministers or other people say, in 2012—or whenever plans are now due to be launched—the same story will be written. Does anyone in this Chamber honestly believe that in 2012 " Sun money" or " Mirror money" or the money column in our local papers will not write stories saying that because of means-testing some people will lose out if they save in a personal account? Does anyone honestly believe that that will not happen? Does anyone honestly believe that some small employers faced by an unwelcome increase in their wage costs will not quietly show those stories to their employees? Does anyone honestly believe that employees generally will not chat about these issues in the pub or the sandwich queue? Does anyone honestly believe that the number of people who decide to opt out of personal accounts will not increase as a result, with the consequence that future generations and future Governments will have to bear a much larger cost for means-tested benefits than they would have done had these reforms worked as intended?
	I simply do not understand why Ministers are behaving like ostriches with their head in the sand. Having a proper debate about solving the problem would not undermine the consensus; it would strengthen it. Ministers seem convinced that providing generic advice to potential savers will do the job, but how much real advice do they think they can provide to people from a low-cost product that will have to pay off the start-up costs of the first years of its operation and that will be at the lowest possible end of affordability within the pensions market?
	The Minister asks what we should do. Many alternatives have been suggested to the Government. Two detailed approaches have been produced by the Pensions Policy Institute, looking at potential options such as raising the limit for trivial commutation. I have suggested to Ministers—it is only a suggestion and I would happily talk privately to them about it—that we might be able to offer those who lose out some form of money-back guarantee, perhaps through a higher lump-sum entitlement. However, Ministers do much to undermine the concept of consensus by not saying in response, "That's an interesting idea; we'll take a look at it"; instead, they accuse us of making uncosted commitments and coming up with ideas without foundation. They do not seem to understand that nobody except them has the ability to work all this through in detail—not Her Majesty's Opposition, not the Liberal Democrats, not the right hon. Member for Birkenhead (Mr. Field), not the PPI, not the CBI, not the Association of British Insurers. Only the Secretary of State and the Minister have access to the necessary modelling, data and information to be able to look properly at the options—to be able to look at how much it would cost us to do nothing and how much it would save us to do something.
	Will the Secretary of State carry out a proper public assessment of the available options? Will he look at all the alternatives that have been suggested and what they will cost? Will he look at the cost implications of higher or lower levels of take-up, and the impact on the cost of means-tested benefits in the future? Will he do that work? He has the teams of people to do it—I do not have them, and nor do the Liberal Democrats. After he has done that work, will he lay a paper before this House? We could then have private and public meetings; let us discuss these issues and between us try to work out a solution. The Secretary of State cannot refuse to have such discussions and to provide access to his databases and to allow all of us to look at the options, and then accuse us of undermining the consensus; that is not good enough.
	Means-testing is not the only area where we are unconvinced that the Government have got things right yet.

Hugh Bayley: I have a point to raise before the hon. Gentleman leaves the subject of means-testing. One way to get away from the problem described would be to reduce the value of means-tested benefits. I would not want that to happen—I would not want there to be any reduction in eligibility for pension credit or a reduction in the uprating rules—but is that what the hon. Gentleman's party has in mind? Does it have in mind reducing the value over time of pension credit?

Chris Grayling: The trouble is that whenever we try to engage in a constructive discussion of what we might do, a Labour Member pulls the debate back to a simplistic option. None of us has any desire to reduce the amount that our pensioners, and particularly our poorest pensioners, receive. I happen to think that the Government have introduced a means-testing system that is much too complex, but I have no desire to remove money from the pockets of the poorest pensioners; they struggle enough as it is. Nevertheless, it is important to get this matter right. The hon. Gentleman should understand that; he should have a private chat with his colleague the right hon. Member for Birkenhead, who understands these issues far better than any other Labour Member. There are many other aspects of the Bill that need to be properly debated, but this is one that they must get right.

Graham Stuart: Does my hon. Friend share my dismay at the approach of Ministers—and, indeed, of many other Labour Members—which is one of indifference to the most vulnerable in our society, who could spend decades paying into something that does not benefit them? This is not insincere indignation on our part; it is a genuine concern. It is extremely disappointing that the Secretary of State fails to take this issue seriously—and, perhaps, to give figures at the Dispatch Box today—not least for those who may well lose out if we do not get this right.

Chris Grayling: My hon. Friend is right. I hope that a Minister will, either now or in the closing remarks, say, "Yes, we're happy to do that. We're happy to open our books and have a dialogue, and to work through models and alternatives, and to make all that public and let the Committee discuss it, so we can really work through this issue properly." I still hope that they will offer to do that.

Gisela Stuart: I am genuinely puzzled. The hon. Gentleman does not make a sufficiently clear distinction between state pension provision and occupational pension provision. Let us consider any modelling or any actuarial assumptions that he might choose. Employment patterns, for example, have changed over the past 10 years. Even the Government Actuary has had to keep changing assumptions over the past 10 years. There is a notion that if we talk for long enough we will arrive at the proper answer. The Turner report tried to reach a compromise between what the state does and what the individual does. Tapering of benefits has always been a problem. The hon. Gentleman needs to be a little clearer about what he considers to be the alternative to the Government's answer to long-recognised problems. Essentially, he has slagged off the Government. The hon. Gentleman also should not patronise us by saying we do not understand, as some of us have been Members for longer than him and have been interested in pensions for longer than him. I have no sense of what he is proposing, other than that he does not like what we are proposing.

Chris Grayling: If the hon. Lady really had taken an active interest in pensions for all those years she would understand both the difference between a DB scheme and a DC scheme in terms of the issue of mis-selling and that the original Turner report made its recommendations on the assumption that there would be no expansion of means-testing—indeed, that the opposite would be the case. I have made a request to the Secretary of State and the Minister in the spirit of the consensus of us all wanting these reforms to work. I hope that that will be taken up in the winding-up speech or at any stage over the next few weeks, as it is essential that we get this right.
	Let me turn to other areas where there remain issues that need to be debated. Ministers need to explain in much more detail how they are addressing the issue of levelling down. Concerns have been raised about that in the debate, and it has been raised as a concern by the PPI and actuaries over the past few weeks. Ministers have not had that much to say about it. The Secretary of State tried to reassure us but did not address all the issues. There is a danger that many small employers will choose to close down existing provision, including some of the stakeholder schemes that got off the ground as part of the Government's last set of reforms. The risk is that if levelling down does take place the amount saved will be affected and there will not be the increase in overall saving levels that we want to see.
	Ministers should remember that the success of these reforms will depend not only on attracting more savers, but on generating higher overall saving. That is why the Secretary of State must do better in ensuring a level playing field for different types of pension provision, and particularly different types of pension product. It would be disastrous if existing provision were downgraded because it was easier to operate a system of personal accounts.
	That is why the Government's failure to sort out the issue of auto-enrolment for group personal pensions is so disappointing. There is no logical reason why auto-enrolment should be acceptable for personal accounts but not for group personal pensions. We know that, in fact, the reason that has not happened is European law, but why have not Ministers sorted this out in Brussels? Does anyone actually believe that the Secretary of State's French counterpart would not have sorted things out by now? There might even be solutions that avoid Brussels altogether. There have been detailed discussions between the Secretary of State's Department and the industry, which has identified possible solutions to this problem, but he and his team have not acted on them. Why not? Will he introduce amendments to the Bill in Committee that will address this issue?

Kelvin Hopkins: Would the hon. Gentleman be prepared to accept the high level of contributions to social provision that employers in France make? Does he think that that would go down well with his friends in the CBI?

Chris Grayling: It is disappointing again to hear a Labour Member trying to divert attention from what are, as the Secretary of State rightly pointed out, serious issues relating to a serious Bill.
	A number of important technical aspects of these reforms also need to be debated in detail, and I hope that Ministers will be ready to listen to sensible advice on them. We know that this Bill has been rushed into the House for entirely unrelated parliamentary reasons, and, as a result, too many details remain unresolved and too many clauses leave most of the important elements to subsequent regulations. We will need a lot more information as it is considered in Committee. Let us take the example of lump-sum contributions to personal accounts. Many groups are arguing that people who save in personal accounts should be able to make one-off contributions to them. I understand the logic of, for example, allowing people who take a career break to make catch-up contributions, but Ministers must not forget the nature of the product that they are launching. A pension plan that allows only 0.3 per cent. for running and marketing costs is going to be as basic as basic can be in the pensions world. Proper advice to savers is not going to be available. I am not convinced that it would be right to encourage payment of lump sums such as an inheritance into a personal account when proper independent advice cannot be obtained first. I hope that Ministers will address that issue as the Bill goes into Committee.
	Ministers must handle the enforcing of auto-enrolment—the Bill does not contain all that much on this—with extreme care. There is rightly a duty of auto-enrolment on employers, and there will rightly be a sanctions regime for those who do not comply; equally, we know that employers are going to be at the sharp end. They will receive questions from employees about what to do, and they will be unable to avoid ending up in some form of discussion with them. There is precious little in the Bill to explain how those conflicting pressures will be balanced.
	There is also far too little in the Bill about the role and remit of the personal accounts delivery authority. We want to see a much clearer definition in the Bill of the role of the authority and its successor body. We want clear provisions that prevent mission creep in the years ahead. The authority will become, if not the biggest, certainly one of the biggest pension organisations in the UK. If we are not careful, it could have a significant and disruptive impact on other aspects of the pensions market. It has an important role to perform, but that role should be properly defined and set in statute.
	We also want to see rapid progress in the governance of the new authority. At the moment, its board is made up of a chief executive—who clearly has had one or two friendly conversations with the Minister in the past few weeks—a highly controversial chairman and a non-executive director from the TUC. The Secretary of State and its current directors need to do a lot better than that if the authority is going to operate in the way that it should.
	I want to touch on two final points, the first of which relates to the regulatory package in the Bill. The Government's proposals are a useful step, but they also represent a missed opportunity. The job of this House should be to ensure that adequate regulation is in place to provide the protection that investors rightly expect, but it is not our job to do the pensions industry's job for it. Over the past decade, the Government have interfered much too much in the detailed management of pension schemes. They have made it more difficult to run schemes, more difficult to adapt to changing circumstances and more difficult to innovate. That should change. Many of the professional bodies in this field have put forward ideas that have the potential to help pension provision evolve and improve; some of them require deregulatory measures of a kind that this Bill simply does not address. We will press the Government in Committee on such improvements, and I hope that Ministers will respond constructively to those discussions.
	My second point relates to the timing of the measures set out in the Bill. As the Secretary of State knows, the reform package introduced by his predecessors had a specific target start-date of 2012, and he is required to set a date for the re-linking of the basic state pension to earnings by the end of this Parliament. Given that this Parliament came within one green bottle of ending last October, can he confirm definitively to the House today when the full reform package will come into force? Will it be introduced in 2012? We now know about the discussions that have taken place on personal accounts, but will the rest of the package—in particular, the re-linking of the state pension to earnings—start in 2012? I will happily take an intervention now from the Secretary of State if he wants to answer that question; if not, I ask the Minister to address it in his winding-up speech.
	This Government's track record on pensions in the past 10 years has been lamentable. They have presided over the rapid decline of our pension system and let down many of our most vulnerable elderly people. Their past efforts at reform have failed abysmally. The one man on the Labour Benches who appeared to have any idea how to tackle our pensions challenge had his ministerial career summarily terminated by the then Prime Minister—probably because he is smarter than him. I want these reforms to work and this Bill to make a difference not just because they are right for the pensions of tomorrow and for all our futures, but because we fully intend that a Conservative Government will implement these reforms in four years' time.

Frank Field: I want to make just two points, and in doing so to come back to the praise that has rightly been given to the Secretary of State, the Minister and the many people in the Department who must have worked with them to achieve the successful settlement for people who thought that they were paying into an occupational pension, and were cruelly robbed. Through the actions of the Secretary of State and his team, the lives of those people and their families, although not put back together exactly as they were, have been massively changed. Many people will now go into retirement without having heart attacks and various other terrible illnesses brought down upon them through the feeling of injustice that they were suffering in not getting the due deserts of their pension savings.
	In no way do I want to divert attention from that achievement, but in fact the achievement is even greater than the House has said so far, in that it ricocheted into the wider debate on pensions. Although we might say that only 140,000 families were affected, every one of those families were affected 100 per cent. All those families had children, grandchildren, neighbours and friends, and they all went about their business cursing the day that they saved, either voluntarily or because they were told to, for their retirement pension. Newspapers were putting forward the message throughout the country that it is not sensible to save for old age through any pension scheme. We could not have had a serious debate on pension reform until we brought justice and closure to that group of people. Although those wounds will take some time to heal, those people are not now instructing their children and grandchildren not to behave like their parents and grandparents, who foolishly saved for their retirement income. They now know that although they had to wait—as we, in a lesser sense, had to wait—for justice to be done, it has been done. Not only has justice been done for the individual; a different atmosphere has been established for people who are thinking about planning long-term savings for their retirement.
	Although, in turning to my second point, I am critical of the Government, I do not in any way want to withdraw my endorsement of the positive comments made by others in the House. However, I do want to sound a genuine note of caution about the consensus that even the Opposition share on this measure, because I do not share even their sense that the Bill is going in the right direction. Whenever we discuss pensions, we wind ourselves up into a moral fervour because we are desperately anxious to get them right, and to do well by our constituents and our country. Not that long ago, we were debating stakeholder schemes and being told that they were the great solution that would solve everything. I disagreed with my party on that, because I did not think that they would do anything like the claims that were being made for them. I did not think them dangerous; I just did not think that people would buy the damn silly schemes, and, to a large extent, they have not done so.
	The Bill moves us into new territory by establishing a body to run the scheme and providing for automatic enrolment. If we are to be responsible to our constituents, we must address two dangers. First, we do not know where we will be in the business cycle when the new scheme comes into force. The Government have been extraordinarily well judged in running the economy. The 10 years of growth, which follow growth from 1992, are a remarkable achievement of governance and the benefits to our constituents have been enormous, but we might be foolish to think that we have abolished what used to be called the trade cycle and has more recently been called recession.
	If this measure is introduced when the economy is in a much more difficult situation than it is today, employers will look around to find ways by which they can cut costs, not because they are evil people, although some of them may be, but because they will want to keep their firms going and to keep people in employment. An official Government-sponsored scheme that lays down a modest contribution from employers towards the pension coverage of their employees will be coming on stream, and I fear that many employers, who at the moment would not think of cutting their contribution to their occupational pension scheme, or even to personal pensions, may think that they need to do so in order for their firms to survive. They would, in a sense, feel justified, in that this is the new state scheme and they would still be fulfilling what is required. What the Government rightly judge to be a minimum floor on which to build may become a horrendous ceiling over which contributions do not rise. Thus, the big issue that the Government are genuinely grappling with and have put a huge effort into—I admire the way that they have gone about their task—might result in even less saving being undertaken than happens now.
	My second point is that I want the House to consider what would happen if instead of establishing our own delivery authority, we gave those powers to the private sector—to Legal and General and the Pru—and they, with minimum advice, could automatically enrol employees into a scheme that might not leave them a penny better off. Labour Members would all be jumping up and down saying that this is the beginning of the next horrendous mis-selling scandal. It will be different from the previous one in that it will be Government inspired, and our poor constituents will not be able to take the Government to court in the way that they have tried to do over previous mis-selling.
	I ask the Government to try to separate out what they think are the petty party points that the Conservatives might be making, and address the genuine issue for many of our low-paid constituents. They may have high hopes that they will one day climb the occupational ladder and make returns for their labour that ensure that they get a fantastic pension in retirement, but we know that many who start out at the bottom sadly too often end there. Tonight, we might be beginning to introduce legislation that will require compulsory savings by groups of people who would not see things in such terms. They want to look after themselves, to save and to be independent—they have all those noble aspirations—but at the end of the day they will not be able to save anything like enough to take them free of means tests and make themselves one penny better off. Before the Bill passes this House and receives its Third Reading, we owe it to those people, the most vulnerable in our community, to address that issue and that group of workers seriously.

Danny Alexander: As often happens on these occasions, I have the pleasure of following the right hon. Member for Birkenhead (Mr. Field), who made perspicacious comments on the Bill. I start by echoing what he and hon. Members from all parties have said about the Government's announcements on the financial assistance scheme. After a good deal of campaigning—the Secretary of State and the Minister for Pensions Reform attended demonstrations in Downing street and so on to hear directly from the pensioners concerned—an issue that had been a running sore for far too long was resolved. Those Ministers deserve a good degree of credit for what they have achieved in that respect, and have rightly been given that from both sides of the House.
	As has been said, there is now a need for speed in implementing these reforms, and I agree with the Secretary of State about the Bill being a way to achieve that. I should draw his attention to one other thing in that respect. The Pension Protection Fund is an organisation and administration that is already trying to run schemes that have many of the features of the new version of the financial assistance scheme. The PPF could be given the role of speeding up the administration of the FAS and its new characteristics. I press the Secretary of State, if he has not already done so, to consider that option urgently as a way of ensuring that those pensioners get the money that they are now due to receive as quickly and as happily as possible.
	I start by giving a general welcome to some of the proposals in the Bill on the personal account scheme. Some of the features embodied in the Bill are welcome—for example, the principle of automatic enrolment, the principle of compulsory employer contributions and the principle of low charges, although I have concerns about how we can be sure that that will continue once the personal accounts board takes over from the personal accounts delivery authority—based as they are, in part, on the only relevant international example, the New Zealand KiwiSaver scheme, which is delivering some benefits in that country. The Liberal Democrats have proposed such a scheme with such characteristics for a number of years, so it would be churlish not to recognise that the Government have come forward with a proposal that has many welcome features.
	It is important to try to move on from some of the slightly shrill exchanges that have taken place. We want the Bill to work, but for that to happen some big, serious and important problems need to be debated and resolved. We believe that the important two related issues are the interaction of means-testing and how advice will be dispensed and dispersed.
	We want consensus, but all sides need to enter into that. Developing a consensus means that all sides must listen, must give way and must work to maintain it. It is not good enough for the Government to say, "Here we stand. This is the consensus. Come and join us or be vilified for failing to adopt the policies that we have put forward in this Bill." A consensus needs to be built, and that means give and take on all sides.

Peter Hain: I cannot disagree with what the hon. Gentleman is saying, but I remind him that the Government have not said, "Here is our consensus, take it or leave it." The consensus was built up through the Pensions Commission headed by Lord Turner. It took some effort to find a way forward for a problem that we all acknowledge to be serious and that is where the consensus comes from. In the course of the Bill, if the hon. Gentleman makes some practical suggestions—I will certainly look at what he has said so far—we will see what we can do.

Danny Alexander: The Secretary of State is of course right to point out the history of the debate, which goes back—as he mentioned in his speech—to the days of Lloyd George. The more recent history shows that this consensus has taken some development, although the proposal in the Bill is different in some respects from that made by Adair Turner—and rightly so, because the position has evolved with arguments from industry, political parties and so on. However, the Secretary of State also effectively accused those Liberal Democrats and Conservatives who are highlighting the genuine concerns about means-testing of scare tactics. That suggests an attitude that is not especially open to new ideas. It does not suggest that the Government are willing to put their shoulder to the wheel to find new ideas to resolve the problem. It is not a question of scare tactics, but of a debate between people who want to try to find a way to make the scheme work.
	I warn the Secretary of State that the slightly shrill tone that he adopted in parts of his speech was unfortunate, because it will give some people outside the House the impression that the Government are trying to hide something. We should avoid that impression.
	The key question is whether the scheme will work for the target audience. As the Secretary of State outlined in his speech, the benefits are potentially huge. Estimates vary, but between 6 million and 9 million—even up to 10 million—people could benefit from a properly constructed personal account scheme. So the prize is significant. I draw the Secretary of State's attention to some groups that will not be able to take part in personal accounts, such as the very low paid, for perhaps obvious reasons, as well as those who may have several jobs that are paid below the minimum threshold. In my constituency, for example, many people work in the tourist industry on a seasonal basis, with one job in the summer and another in the winter in the ski industry—for as long as climate change allows that to continue. Each job may pay less than £5,000, but the total earnings over the year may take them well above the threshold. The way in which the scheme is set up—I understand the reasons behind that, such as cost minimisation—means that such people would not be able to benefit from a personal account. The tourism sector might be one in which the benefits will not be as widely felt as perhaps they should.
	The key issue is means-testing. Since 1997, means-testing for pensioners has substantially increased. The Pensions Policy Institute estimates that overall levels of eligibility for any means-tested benefit are likely to be 50 per cent. in 2050, although they could be as high as 65 per cent. Its estimate suggests that 40 per cent. will be in receipt of pension credit, but other means-tested benefits at stake include council tax benefit and housing benefit. I realise that making predictions about the benefit system in 2050 is hard, but we have to base our approach on where we are at the moment.
	In addition to the potential problems for personal accounts, the means-testing strategy has wider problems. Many people do not claim means-tested benefits because of their complexity. For example, more than 1.5 million pensioners eligible for pension credit do not claim it. In recent years, council tax bills have gone up substantially, but only 53 per cent. of pensioners claim the council tax benefit to which they are entitled. Means-testing also erodes the returns from saving and reduces incentives to save.

Nick Palmer: Does the hon. Gentleman agree that that is an argument in favour of the scheme? Although there are people who, for one reason or another, do not claim council tax benefit or housing benefit, it is likely that almost no one will fail to claim the pension for which they have saved.

Danny Alexander: I am not sure that that is an argument in favour of the scheme. Presumably all Members would want people to claim the benefits to which they are entitled, and using the fact that some do not as an argument in favour of the scheme seems wrong. It does however reinforce the importance of a basic state pension that raises people above the poverty line and forms the firm foundation that is needed to make the personal accounts workable for everybody.
	The Pensions Policy Institute analysis shows that the people who run a high risk of personal accounts being unsuitable are likely to receive back less than the value of their contributions. The institute has highlighted several groups, including single people who are likely to rent in retirement and have no additional savings. Those people are likely to qualify for less means-tested housing benefit as a consequence of saving in a personal account. In 2005, 20 per cent. of pensioner households were eligible for housing benefit, which is likely—according to the PPI—to place them in the high-risk group. The latest projection suggests that that figure could fall to 15 per cent. if current home ownership trends continue, but the interaction between personal accounts and housing benefit is a critically important part of the argument that must not be lost in the debate.

Nigel Waterson: Is the hon. Gentleman aware that one of the difficulties is that the Department's model does not take account of housing benefit, whereas the PPI's does?

Danny Alexander: That is an important point which we would all be more able to understand if we were given access to the Government's model. That would be a start to a more open approach to building a consensus. The hon. Gentleman is right.
	It is important to note that the 15 per cent. is not a ceiling for the number of people at risk of losing out if they save in a personal account, but a floor, because other people fall into what the PPI describe as medium-risk groups, such as low earners who are in their 40s or 50s in 2012 and who have not yet started saving. Those people could lose entitlement to pension credit, council tax benefit or housing benefit as a consequence of saving, depending on their circumstances.
	The Secretary of State implied that almost everybody would be better off saving, and the first thing that we must do is to acknowledge that, given the current structure of the benefit system and pension credit, some people—we can debate how many, and it would be nice to have some information from the Government on that—will find that the personal account is simply not suitable in its current proposed construction. Therefore, to argue that everybody, no matter what their personal circumstances, should save risks the sort of mis-selling scandal that the right hon. Member for Birkenhead predicted. The question is what can be done about that problem, and several ideas have been floated, such as increasing the trivial commutation limit. The PPI has suggested a disregard. Both ideas have been knocked down by the Secretary of State on the basis of what he calls affordability, but it is inconceivable, in circumstances in which the number of people of pension age rises significantly in the next 30 to 40 years, that the proportion of our national income that we spend on pensions should not also rise.
	The Secretary of State's remarks about affordability are based on the idea that spending on state pension will remain broadly constant as a share of GDP for the next 20 to 25 years, but the number of people claiming pensions will rise. That suggests that the cake is being divided in such a way that pensioners will receive ever smaller crumbs. That is not the way to provide a firm foundation so that people can save for themselves. That is why the Liberal Democrats propose a citizen's pension, so that the basic state pension raises people above the poverty line, whereas at the moment people have to rely on pension credit for that in most cases.

Sally Keeble: Does the hon. Gentleman accept that the point about the citizen's pension is not how much it is but that everybody receives it? One of the fundamental issues on which his party is wrong is that people have a sense that they should contribute towards their pension. Initially I was attracted to the idea of the citizen's pension, but the contributory principle is important. People think it is important to work and save for retirement; they seem to appreciate that fundamental principle.

Danny Alexander: Given the fact that over recent years Governments have dramatically eroded the contributory principle in a range of ways, the idea that it should be treated as a shibboleth in the pensions world is wrong. The proposal is that the citizen's pension should be based on residency. One of its benefits would be for women. The hon. Lady has expressed concern about women's pensions, because a huge number of women do not have access to a full state pension.

Steve Webb: I apologise for interrupting my hon. Friend, but the difference between him and the hon. Member for Northampton, North (Ms Keeble) is 10 per cent. The Secretary of State said that 90 per cent. of people, through a complicated mechanism, would receive a full pension. Under our proposal it would be 100 per cent. The state spends billions of pounds keeping decades of records to exclude 10 per cent.—almost all women—from pensions. That cannot be a sensible use of taxpayers' money. Does my hon. Friend agree?

Danny Alexander: I agree wholeheartedly. There is lasting consensus between my hon. Friend and me. He makes a serious and important point. The UK pensions system is hugely complicated—the most complex in the western world—with all its ifs, buts, caveats, contributory principles, means tests and so on, to exclude a relatively small number of people from a pension that would keep them from poverty in retirement.
	The first step should be uprating the basic state pension in line with earnings. The Government say they might do that in 2012, but perhaps not until 2015. It would be nice to know, but as we said at the time of the last Pensions Bill, uprating in line with earnings should be introduced now. Why should the basic state pension, which is lower in real terms than it was in the 1950s, continue to fall in real terms until 2012 or 2015? That uprating should be the first building block of our citizen's pension.

Kelvin Hopkins: I am interested in the hon. Gentleman's citizen's pension idea. Does he think that a reasonable target to aim for would be the 25 per cent. of average earnings that the basic state pension was when the Tories broke the link 27 years ago?

Danny Alexander: I am grateful to the hon. Gentleman for his interest, but we need to aim for what is defined as the poverty line—the minimum income guarantee in the current pension credit. My maths is not quick enough to work out whether that would be 25 per cent. but it probably does not quite reach that amount. The hon. Gentleman's proposal is a further degree of ambition, from a policy and financial point of view, to which I cannot agree at this stage. However, the citizen's pension would certainly be one way of providing a firm foundation whereby anyone saving in a personal account would know that they would receive full value and full return on their savings.
	The most frustrating thing about the Government's attitude to means-testing is that, in effect, they throw up their hands in horror saying, "It's someone else's problem—think of an answer." If both sides of the House accept that there is a problem and that it will not be worth while for some of the people—probably hundreds of thousands—who will be encouraged to save in a personal account to do so— [ Interruption. ] The number may be higher; it may be millions, as the right hon. Member for Birkenhead suggests. I am not sure whether that is right, but in the absence of the proper research and information that the Government could provide, it is hard to know. Even if the number is only hundreds of thousands—

Frank Field: The Government's new estimate of the number of people who will be on means-tests after the reforms is about 40 per cent., so the figure will not be a few hundred thousand; millions will be in that category.

Danny Alexander: The right hon. Gentleman is right about the figures, although to be fair to the Government, if we are talking about people who get back less than they put in, some of them will have built up a big enough pension pot to ensure that they receive some return on their savings even if it is not the full return we hope everyone will get, especially if the compulsory employer contribution is set up correctly.
	The Government seem to be saying that it is up to other people, such as Opposition parties or think tanks, to find a way out of the problem. To reinforce the point made by the hon. Member for Epsom and Ewell (Chris Grayling), the Government have the resources, as well as the civil servants and policy wonks, to work through a range of options. They have not done so, and given the importance that many of the lobby groups, who broadly support the Government's proposals, and the House attach to the issue it is astonishing that the Government have not done more work. If the consensus is to be maintained I appeal to them to do that work as a matter of extreme urgency.
	Advice will be needed. A wide range of factors will affect people's decision about whether it is worth their while to save: age, future earnings, whether they plan to take time off work, the sort of work they do and their level of personal indebtedness. Advice will be required on all those factors. It may be relatively straightforward to reflect some of them in a generic advice system, but it will be much harder to do so for others, such as the affordability of contributions, indebtedness or likely future earnings. The Pensions Policy Institute concludes:
	"People will need very clear information to help them make informed decisions about whether they should stay in or opt out of personal accounts. Any system of generic advice will need to be able to cope with providing advice to a wide range of individuals with different characteristics and financial circumstances."
	Likewise,  Which? believes that
	"generic advice arrangements on a one to one basis, probably through a telephone advice line but possibly supplemented by face-to-face provision must be included".
	Unfortunately, the Bill leaves all aspects of the advice system to be determined by regulation at a later date. Presumably the Government will say that is because the Thoresen review is still under way and they are waiting for its recommendations.
	That is not good enough. We need a well worked-out advice system, which will not impose extra costs on personal account holders, if the risk of mis-selling to some groups is to be avoided. In another context—personal debt, which is a huge problem—my hon. Friend the Member for Twickenham (Dr. Cable) proposed the establishment of a national network of financial advice centres. The Government should actively work with the financial services industry to achieve a national roll-out of independent advice centres, providing financial health checks and advice.
	At present, following the new polarisation rules, it is difficult for many consumers to obtain independent financial advice. The CAB provides advice, but usually only for people who are already in debt difficulty. A network providing genuinely independent advice would be in the best interests of the financial industry, the pensions industry and particularly the Government in relation to personal accounts. It would help to restore confidence. Clients could be offered advice on a wide range of issues, including personal accounts. Setting up such a network, with proper resources from the taxpayers, not from personal account holders or through the personal accounts delivery authority, would enable us to offer the range of advice people need.
	The Bill offers us a chance to address the issue of women's pensions, to which the Secretary of State referred. He was talking about the Government's disgraceful decision, sneaked out on 17 December in the House of Lords, that they had decided to make no change in the current rules to allow individuals to buy additional national insurance contributions—to top up their contributions to take advantage of the new rules that are coming in. There have been reports of a trade-off with the Treasury—the financial assistance scheme or Baroness Hollis's proposal.
	The Government have done the right thing on the FAS, but I give the Minister for Pensions Reform notice that we shall return to their pensions decision during the passage of the Bill. Members on both sides of the other place may want to do so, too. At present, there could be the absurd situation that female twins born on either side of midnight on 5 April 1950 have different pension entitlements, despite a work record as identical as their physiology. That cannot be right.
	There is also the important issue of levelling down to address. It is of course hard to predict how employers will respond to the increase in costs that some may face as a result of auto-enrolment, but there is some evidence. Department for Work and Pensions research, quoted in the National Association of Pension Funds briefing for the debate and in the response to the Work and Pensions Committee, shows that 30 per cent. of employers contributing 3 per cent. or more say that they will level down to 3 per cent., with a further 19 per cent. saying that they have not yet decided how they will respond. The Minister may well have new evidence, but the Secretary of State said in his speech that half of employers would maintain or improve the conditions for new entrants to their pension schemes. That prompts the question: what will the other half do? The serious issue of levelling down therefore needs to be addressed.
	Under the Bill, the resolution on the issue of workplace personal pensions is highly unsatisfactory. We are talking about an argument that the Government could win in Europe. It is simply not good enough for the Minister to put his hands up and say, "We cannot persuade other European Governments." There is very little evidence to suggest that the Government have really tried. I suspect that if a proper effort were made to persuade other European Governments, it could be done quite simply, given the common-sense argument being advocated on automatic enrolment. The situation is perhaps evocative of the Government's attitude to matters European. Their attitude is to turn up to meetings with exceedingly bad grace, if they bother to turn up at all, not to contribute in the way that they could at the European level, and not to put forward the arguments for what they want. The argument is one that we could win.
	One suspects that if the Government of France, Germany or another European country faced the same problem, they would be busy winning the argument well before the 2012 date, not putting their hands up and saying, "We've got to try to find another way round the issue, although it may impose substantial additional costs on the employers concerned." I urge the Minister to go to the European Union and to win the argument. I suspect that with the proper effort and commitment, the argument could be won straight out.
	There has been a lot of talk about consensus in the debate, but in future, and particularly in Committee, that consensus has to be based on proper debate and a proper resolution of the genuine concerns and worries about the Bill and the personal accounts scheme. However welcome, well thought through and well constructed they are, they have to benefit as large a section as possible of the target audience, which is people who do not currently save. That is why the arguments on means-testing and advice are so important. The Minister will have to do better in his reply than the Secretary of State did, and will have to do better throughout Committee to ensure that the issue is resolved, so that we can ensure a scheme that can genuinely be recommended to everyone in the target audience.

Several hon. Members: rose —

Madam Deputy Speaker: Order. A number of right hon. and hon. Members are hoping to contribute. The time left for Back-Bencher contributions is limited. I ask Members to make shorter speeches, so that as many as possible can make their contribution heard.

Alan Simpson: I hope that it does not damage the standing or career of the Secretary of State or the Minister for Pensions Reform if I, too, congratulate them on making tonight's debate worth having. If they had not intervened effectively to restore the stolen pensions of the 125,000 pensioners affected, the House would have had to understand what my right hon. Friend the Member for Birkenhead (Mr. Field) said, which is that huge numbers of walking newspapers across the country would have been saying to their families, friends and communities, "You've got to be a mug to save." If the pensions guarantee was not a guarantee, it would have been worthless. The changes that the Secretary of State has been able to make really transform the context in which the debate takes place.
	Between them, the Secretary of State and the Minister have done what none of their predecessors were willing to do. Predecessors did the House, and the Labour party, a disservice by requiring Labour Members to parade through the Division Lobby making fools of themselves by claiming to support a financial assistance scheme that never did, and never would, work. We all owe both the Minister of State and the Secretary of State a huge debt of gratitude for getting us out of a hole. However, let us try to put that in the context of where the Bill takes us. I have no doubt that as a society we need to save more and spend less. In a society that increasingly expects to live longer, the issue is more a biological than a political one. The question is how we make good provision for the increasing length of the part of our life that we expect to spend in old age, and in receipt of a pension. The question is how we get there.
	My worries about the Bill concern what it does not address, rather than what it tries to address. In a sense, it does not address the failures—the legacy of successive Governments who have messed about with pensions provision and retreated from a policy that would genuinely be fit for the 21st century. We are still not addressing our collective failure to restore the value of the state pension, as well as its link with earnings. We are not addressing our failure to halt the retreat from defined benefit schemes, and the drift into defined contribution schemes. We are not addressing questions about the ability of the poor to pay into schemes—a concern that a number of Members have legitimately raised—and we are not addressing the failure to challenge our naive presumption that the market is a mechanism that will get us out of the pensions crisis, rather than take us into another one. I want to concentrate on those two final points.
	The question of who will save is inextricably linked to the issue of means-testing. We need to understand where we are, as a society and as an economy. The Institute for Public Policy Research has reported that 51 per cent. of those in low-income families have working parents. Some 2.5 million households need tax credits to give them a living wage. In addition, Britain is in the midst of our own credit and debt crisis. Last year, personal credit debt rose to £1.35 trillion. UK gross domestic product stands at £1.33 trillion. For the first time in our financial history, personal debt exceeds personal created wealth. That will present us with huge challenges in the year—and years—ahead.
	Grant Thornton accountants predict that in 2008 there will be an increase in insolvencies, with 120,000 in the coming year. That is 20 per cent. more than in 2006. They also say that excess spending on credit in the Christmas period will account for a third of the 28,000 personal insolvencies that they expect us to face in the next three months. Repossessions are currently running at 77 a day, and there were 14,000 in the first six months of last year, which is the highest rate since 1999. That was before Northern Rock and the global credit crunch kicked in.
	Mortgage bills have risen by 20 per cent. in the last two years, and in the coming year there will be 1.4 million households whose preferential periods of access to low-interest mortgage repayment starter periods will come to an end. They will almost certainly not get preferential treatment in the deal that follows. In addition, up to 4 million households are being forced back into fuel poverty as a result of ever-increasing fuel prices.
	Over the weekend, the Prime Minister warned:
	"This is one of the most difficult years for the world economy."
	If it will be difficult for the wealthy, it will be even harder for the poor. We will have to take a long, hard look at how we expect those who cannot afford to live to be in a position to afford to save. That is a practical, day-to-day issue, precisely as fuel poverty is: as we have expressed it, people are faced with a choice between heating and eating. The question is: how will those whom we wish to include in the new Pensions Bill schemes be able to afford it? We need to look at new mechanisms that address the question of affordability, and the most sensible starting point may well be tackling the current provision of £20 billion a year or more that we give in pension credits to the wealthiest in the land. If we have to dip into that money to provide access for the poor, that would be a genuinely progressive and relevant measure.
	The question of who pays is likely to be dwarfed, however, by the question of where the money goes. How short a set of memories we seem to have. In 2002, there was a pensions and investment crisis. In that year alone, £250 billion was wiped off the value of UK pension funds, because the deregulation of world financial markets resulted in pensions being increasingly drawn into short-term, speculative markets. When the bubble of those markets burst, inevitably what people thought were secure savings disappeared. We have not learned from that that there is an increasing incompatibility between short-term speculative markets and long-term, secure pension aspirations.
	If we doubled the amount of money that went into UK pension funds in 2002, we would simply have doubled our losses. To double them today using the same mechanisms would throw petrol on the fire. We cannot pretend that by introducing a new mechanism while shovelling the money in the same direction would do anything other than accelerate the drift into the next crisis. The global credit crunch has been driven by precisely the same mechanisms that took us into the crisis in 2002. Sadly, creative accounting is used extensively in the banking and investment world, and Northern Rock is just the tip of the iceberg. Commentators in the United States have tried to analyse what happened in the off-balance sheet accounting world, which has transformed international banking. They have calculated the impact of what is referred to as "toxic waste" in the banking industry—loans made upon insecure loans upon insecure loans. Using a mechanism outside accounting rules, the banks have created their own credit default swap clubs, in which they swap bad debts and spin them round the table to allow themselves to create more debt. The scale of that activity is estimated to be £45 trillion, or three times the size of the US economy.
	It is no wonder that while central banks, whether in the US, the UK or Europe, have intervened to create credit for the banking world, banks will still not lend to one another, because they know how shaky the foundations are. Throwing more money into that crazy pot will simply accelerate the drive into the next crisis. We have to move the rules about where money goes in a different direction. In 2003, I helped to write a pamphlet on people's pensions that looked at the ways in which the allocation of pension savings had changed in the past 50 or 60 years. I shall give the House just one set of figures. In 1962, 51 per cent. of the total pension fund assets in the UK were invested in UK Government bonds. Today, that figure stands at 9 per cent. Some 80 per cent. of pension fund contribution goes into private equities or corporate bonds, both of which have become increasingly short-term, speculative, mythical and, in some cases, illegal. The danger of throwing money in that direction is that it would simply accelerate the next crisis, which would be a repeat of the last one.
	We do not have to go down that path, and I should like to offer some suggestions to the Minister and the Secretary of State. Some 99 per cent. of share transactions trade in second-hand shares, and are decades away from the principal investment that built anything. They are just swap clubs for second-hand financial entities. If we genuinely want mechanisms that invite people to save, and if we want that saving to be a productive investment in their future security, we must direct those savings into investments in infrastructure, health, education, housing and environmental improvements and security. We could do so extremely easily. We contribute about £50 billion a year to personal pension schemes. If the Bill delivers the Secretary of State's expectations, it will add another £10 billion a year. If we used that money for infrastructure investments, we would not need a single private finance initiative scheme in the land. Last year, the Government received £3.6 billion in capital receipts for the privatisation of public services. Across the piece, we pay an average of 16.6 per cent. interest on PFI schemes, which is an absurd charge on the taxpayer for the next 30 to 50 years.
	If we paid half that rate of interest to bond holders, we could halve the rate of tax for taxpayers, and we would all be better off. Do we have the courage not only to include the poor in a comprehensive, 21st century pension package but to redirect how and where our savings are deployed? The Bill does not do so. It does not address the question of how the poor will participate, and it does not address the question of how those resources will be deployed productively, creatively and constructively to deliver long-term security for pensioners and society as a whole. If we fail to do so, we will end up passing a Bill that favours the City but not savers, which would be a tragedy for which the present generation and those who follow it would not forgive us.

John Greenway: It is a great pleasure to be able to speak in the House at all. In recent months, I have spent so much time in the Council of Europe Parliamentary Assembly that one of my new year's resolutions was to try to speak in the House more often. Tonight was the first available opportunity to do so, but this is an issue of which I have some knowledge as a result of my long association with the insurance industry and my chairmanship of the all-party insurance and financial services group since 1992—a long period, throughout which issues relating to pension reform have been high on the agenda, and have often been raised by the industry and pension groups.
	I wish to begin by telling the Minister that there is genuine good will among pension providers towards the initiative, and they want it to succeed. In the spirit of the contribution by my hon. Friend the Member for Epsom and Ewell (Chris Grayling), however, may I tell him that good will is not enough? We have to face the fact that the issue of pension reform has dogged successive Governments for 25 years, and it is critical that we learn the lessons of past mistakes. It is not yet clear whether all the lessons of past failures have been fully taken on board in the Bill. When the previous Secretary of State, the right hon. Member for Barrow and Furness (Mr. Hutton), announced just over a year ago, in December 2006, the Government's intention to proceed with the Turner proposals for personal accounts, I asked him two questions. First, who would be responsible for information, advice and explanatory literature under the regime? Secondly, what would be the impact on existing schemes of the new floor of 3 per cent. of contributions? It is absolutely clear from today's debate that the answers to both questions remain unclear, so I want to concentrate on them in my brief remarks.
	The issue of information and advice is crucial. People need to make properly informed judgments about how much to invest in their pensions, whether to invest at all, or whether, difficult though the Secretary of State has reminded us it will be, to opt out of auto-enrolment altogether.
	Much has been said in this debate about the impact of means-tested benefits, and that is undoubtedly important. However, there will be a deterrent if people think that saving is not worth the sacrifice. We must address the issue, and I hope that the Minister will have something more positive to say in his winding-up speech.
	We should be in no doubt that it is difficult to judge in advance whether low-paid employees should stay in the schemes, because there are so many unknown and imponderable factors. What will the contributions during a working life be worth come retirement age? How much income will those contributions then generate? What will annuity and interest rates be like? What will be the impact of inflation at that time? What type of annuity should people buy? Will employment experience and record over a long period enable an individual to build up a worthwhile investment record through their fund? Those questions are critically important, but the answers are extremely difficult to predict in this debate today.
	Not only the Government but Parliament and the country are in a Catch-22 situation on the issue of means-tested benefits. It is clear to me—and I think this was what the Secretary of State was trying to hint at in his robust exchange with my hon. Friend the Member for Epsom and Ewell—that unless people make provision for their retirement in much greater numbers, pressure to provide help through means-tested targeted benefits will remain. It will be there for all Governments. However, affordability will eventually be the issue. How much longer can we afford our expectations, given that there will be two employees per pensioner to fund everything on pay-as-you-go? Clearly, we will not be able to.
	In a sense, we should not be debating whether the existing structure of means-tested benefits will continue indefinitely but whether the principle and philosophy should be that people must realise that they should save for their own provision because there will be limits on what the state can provide in the future. That has nothing to do with whether one political side or the other wants to be more generous or has a greater feel for low-income pensioners' problems; it is the reality that we are beginning to face.
	When I first came to the House more than 20 years ago, I thought that that was the only issue. However, today we face what in principle is a good idea and scheme, but one that, if we are not careful, will be wrecked or undermined because of the expectation that the state will always provide in the end. The right hon. Member for Birkenhead (Mr. Field) was exactly right, and I shall come to his point in a moment. We have to address the issue before this Bill leaves the House. Unless people who invest in the personal accounts and choose not to opt out believe that they will be better off as a result, the provision will fail—for exactly the reasons given by the right hon. Member for Birkenhead. It is not rocket science. The Help the Aged briefing note makes clear a number of ways in which the issue could be resolved. I urge the Minister to take them on board.
	Past initiatives came unstuck when retrospective judgments rightly concluded that people took wrong actions. When those had been subject to advice, compensation had to be paid, at huge cost to the financial services industry. That means all of us—all of us contributed to that compensation in one way or other, if only through the reduction in the value of the residual funds of life insurance companies and pension funds.
	All that has induced a climate in which providers seek to avoid giving advice. Advice also adds to cost, which undermines return and value. The Government themselves were criticised by the parliamentary ombudsman for the misleading nature of Government leaflets on occupational pensions. The Secretary of State made a comment about sending messages, and that is precisely the point. The Conservative Government in office in the Parliament before I was elected, when I was working in the financial services and insurance industry, actively encouraged people to get out of occupational pensions and into personal pensions. Even the state said that portable pensions were the things to have. However, that turned out to be completely wrong and we are in danger of doing the same thing again.
	Ideally, advice should be available, but it is unlikely that it can be given on an individual basis in the current regulatory framework. The all-party group on insurance and financial services keenly awaits the outcome of the Thoresen review on generic financial advice. I am not as pessimistic as some of my hon. Friends, including my hon. Friend the Member for Epsom and Ewell; I think that Thoresen may provide a solution. We need to foster greater understanding of what people do with their pension investments, insurance products and so on. They should be absolutely clear, but for that the detail must be right.
	My hon. Friend made a point that concerns me. There is an opportunity for people, without advice, to put lump sums into personal accounts instead of, with advice, putting lump sums into other investments that may not be pension investments at all. That concerns me.
	I shall deal briefly with my next point, because my time is going. The Secretary of State said that most employers were unlikely to reduce existing contribution levels. I would like to share his optimism but, as the right hon. Member for Birkenhead clearly said, the future is less certain and if employers are under financial pressure, they may reduce them.
	However, my greater concern—and the point that I made in my intervention on the Secretary of State—is the continuing demise of defined benefit provision. There may be reason to believe that the haemorrhage has been stemmed for the moment. However, the signs are crystal clear: remarkably few young workers in the private sector—our children—will enjoy a final salary or defined benefit pension. That is an appalling shame, because such pensions were the bedrock of employment for the generation that preceded ours and our generation. What is the result? Comparisons with the public sector are already putting pressure on the retention of defined benefit schemes, our parliamentary pensions included. In defined benefit schemes, the employer takes all the risk; in defined contribution schemes, the employee takes all the risk. There must be a middle way. The Association of Consulting Actuaries proposal may not be perfect, but I say to the Minister that the Bill is an opportunity for further reform. Conditional indexation works in Holland; I am about to get married to a lady from Holland, and I recommend all things Dutch to the Minister.
	Time does not allow me to address the many other issues. I agree with all that has been said about the group personal pension problem, which must be resolved. However, there is a lesson there as well. I believe that that problem is an unintended consequence of European Union rules on distance selling. Nobody thought that the rules would have that effect when they were approved in Statutory Instrument Committees. Similarly, we need to be clear that there will not be unintended consequences from the existing provision for the new personal accounts, the personal account delivery authority structure and the regulatory framework.
	If good intentions and an aspiration for consensus and progress were sufficient, we would not be in this position. We have one last chance to get this right, and if we fail this time, we fail a whole generation and beyond of future pensioners. As many colleagues who know me are aware, I am an optimist—a glass-half-full person, not a glass-half-empty person—but the half-empty glass needs to be filled in Committee; otherwise, I share the concern of the right hon. Member for Birkenhead that we could stare further failure on pensions firmly in the face, not now, but in a generation's time.

Anne Begg: I, too, am an optimist and a glass-half-full person; that is why I welcome the Bill. Some of the tone of the debate so far has suggested that there has been a lot more criticism than one gets a sense of from all the briefings from various organisations in the financial sector and charities that work with older people. In most cases, those briefings welcome the principles of the Bill.
	As the Secretary of State said, the issue of pensions is not about old people; it must be a young person's issue. For the first time in this House, the Bill looks far into the future, dealing with how future generations will make provision for the pensions system. As my hon. Friend the Member for Nottingham, South (Alan Simpson) said, this is about demographics and biology as much as anything else. As the hon. Member for Ryedale (Mr. Greenway) pointed out, we must make it easier for people to save for their retirement and make their own contributions to the pension pot. If the demographics determine that more and more people are not paying into their own pension provision, the state will not be able to deliver anything, no matter whether one believes that the state pension should be linked to earnings, that it should exist at all or that it should be uprated. We must ensure that it is as easy as possible for future generations to pay as much as they possibly can into their pension.
	I want to concentrate on two areas that the Government have to get right in order for the system to work: first, preventing any kind of levelling down; and secondly, getting the costs right by ensuring that they are as low as possible. Several hon. Members have mentioned their fear of levelling down. Personal accounts will work only if they are targeted at the particular audience that they are aimed at, which is not the 40 per cent. of people who already have occupational or private pensions, but the 60 per cent. who have no extra provision other than that which they pay through national insurance contributions or the state second pension. The Bill will have done nothing if all it does is transfer people out of very good or even quite reasonable occupational pension schemes and into personal accounts. The scheme is not for them. We must be clear that the Government are not saying that all occupational pension provision should be delivered through personal accounts, because those who are in good occupational schemes with contributions of 16 per cent. or more are able to deliver up to two thirds of their earned income as their retirement income. Personal accounts must be a floor, never a ceiling. Eight per cent. is only half of 16 per cent. I hope that once the system beds down in the years to come, if the consensus is right and this is the way forward for pension provision, Governments of the future will try to raise the contribution level beyond 8 per cent. For the time being, however, it must be seen as a floor, and it is clearly not aimed at employers who already provide good occupational schemes.
	The scheme will be aimed at those who are on low or medium incomes. A large number of the people who are missing out on occupational schemes are women. This will improve the coverage that women have in terms of pension provision. The whole system will fail if few people enrol in the new personal accounts and the savings ratio does not shift at all. We need more people to enrol and to make higher contributions than at present.

Graham Stuart: The real failure of the system would not be the scenario that the hon. Lady paints, but one where many women, who are often part-time workers with broken employment records, contribute to the scheme when they can least afford it because they are auto-enrolled and end up at the end of their lives no better off as a result. That would be the true disaster, not the fact that yet another Government initiative, like the stakeholder pension before it, has failed, because we are well used to that with this Government.

Anne Begg: Obviously the hon. Gentleman can see into the future far better than I can. We do not know what kind of Governments will come in, whether they will continue with any kind of means-testing or whether the pension credit will survive. We are looking up to 50 years into the future, not at the next 10 years or so. As we do not know what will happen, it must be right that we encourage young people to save as much as they possibly can today in order that the scenario that the hon. Gentleman describes does not happen in future.
	Whatever the system with regard to the state pension, if we are dependent on all pension provision in future being down to the state, means-testing will grow, not lessen. To ensure that means-testing develops a much narrower focus, we must encourage more and more people to invest in their pension today so that when it comes to retirement they will already have lifted themselves out of any kind of means-testing. People do not know what their employment record is going to be. Since the second world war, there have been huge changes in the working patterns of women. The Bill moves us ever closer to individual entitlements and away from the old dependency culture that existed under the married person's allowance and the basic state pension. Pension provision and the working lives of women and men have changed so much in the past 60 years that I foresee that in the next 10 or 20 years they will change a huge amount more. The basic message that we have to get over is that it is important that individuals who are working today continue to save in an occupational scheme so that they will have more than just what the state is able to provide through the basic state pension.
	It is important that we understand that this is about deferred wages. Many people have not opted into some of the very good occupational schemes even when they have not had to pay anything themselves. I remember speaking to one young man who had lost out on 10 per cent. of his wages because he had not got around to signing the form, although he was not even expected to add anything to his employer's contributions. Compulsory opt-in is very important in getting over that inertia. We must ensure that there is auto-enrolment and that people do not have to make such decisions. We must also bear in mind low earners who have multiple jobs. As the hon. Member for Beverley and Holderness (Mr. Stuart) said, they are mostly women who have to find some way of increasing what they can contribute. I can understand why there is currently a contribution cap of £3,600—it is obviously because the Government do not want people who are sitting in fairly good schemes to move their contributions across into personal accounts, which are not aimed at that market. I hope that once the scheme beds down, the contributions cap can be lifted.
	The cost must be as low as possible. I would like it to be as low as three basis points. People say that 1 per cent. does not sound very much—it does not, but that was probably partly the death knell of the stakeholder pension. It is 1 per cent. not as a flat rate of contributions but 1 per cent. of the pension pot; once someone has built a big pot, 1 per cent. becomes a viable amount to be taking out of it every year. I hope that we can get it down to 0.5 per cent., but if possible it should be even lower. If the scheme is going to work, it is crucial that costs are kept as low as possible.
	I welcome the Bill. I am glad that there was generally consensus on its principles, although other areas will have to be worked through as it proceeds through this House and the other place.

Bob Spink: It is a pleasure to follow the hon. Member for Aberdeen, South (Miss Begg). She is right to mention the special problems that women face with regard to pensions, but perhaps that is not a debate for tonight.
	Giving pensioners a fairer deal, which means a greater share of the nation's wealth, is long overdue. I warmly congratulate the Government on the pensions review and their response to the Turner report. However, let me set the Bill in context. The incoming Labour Government in 1997 took over one of the strongest pension systems in Europe, which is now one of the poorest. They committed an appalling robbery on people's private pensions, which still costs pensioners some £7 billion every year and has added to the downfall of many schemes. One of the most damaging and surprising failures of the Labour Administration since 1997 is that their policies have led to a fall in the share of British national wealth that goes to pensioners. Frankly, I expected better from Labour on that.
	Pensioners see £25 billion thrown at the Northern Rock problem and wonder at the absence of the financial constraints that the Government always claim to be under when pensioners need help. What about the Government's failure on the Equitable Life debacle and their breach of trust on police pay? I put it to the House that this is no time for politicians to say, "Trust me, I'm a fairly straight sort of guy", as Mr. Blair once infamously did. It is time to get all-party consensus on a decent system to take politics out of pensions and to take more pensioners out of relative poverty. It is particularly galling to see, as we do, our pensioners' share of Britain's wealth falling, when they built Britain's institutions and national wealth after they won national and international security in world war two. Hon. Members do not see things in that way, but pensioners do. It is against that legacy that people's trust in Government policies, particularly on pensions and savings, must be viewed.
	I acknowledge and welcome the fact that the Government have followed the Pension Commission's recommendations on the broad scheme design. While the Bill needs fine tuning, I support its key objectives to encourage more people to save in workplace pension plans and to create a new system of personal accounts.
	I turn now to the specific principles of the Bill. It is right legally to force employers automatically to enrol their eligible employees. The Government should guarantee the quality of those workplace pension schemes and, through the Bill, deliver a strong framework for the introduction by 2012 of well-governed personal accounts. The scheme must be flexible and avoid the baffling complexity that dogs the current pension saving systems. That will help to target specifically the needs of below-average earners, thereby ensuring the highest economically sound levels of participation. Savers must not lose because they have saved. That issue must be addressed.
	It is crucial to ensure that the interaction between means-tested benefits and personal accounts does not lead to benefit losses and thereby act as a disincentive from saving for low earners. I accept that if it is designed correctly the scheme can give millions of low to moderate earners first-time access to secure and worthwhile workplace pensions savings with decent and affordable contributions from their employer. I believe that the 3 per cent. level given in clause 18 is right at the moment. There must be stability on that point, at least in the medium term if not for ever. As the hon. Member for Aberdeen, South and the right hon. Member for Birkenhead (Mr. Field) pointed out, the Government must find a way, if possible, to prevent employers from reducing the current contribution levels.
	Clause 53 will enable the Secretary of State to set an annual contribution limit for personal accounts. I believe that £3,600 has been mooted. That may be inadequate; the figure should perhaps be higher. In addition, there should be flexibility so that individuals can, from time to time, pay in lump sums when they can afford to, if it is financially sound for them to do so and providing that they receive proper independent advice. The Government should find a way to ensure that they do. That would help people who start saving for a pension later in life, and who need to make up for lost time. Those people represent a significant number of workers.
	I agree with Help the Aged, Age Concern and the People's Pensions Coalition that there should be a distinct lifetime lump sum limit alongside the annual contribution limit. That would allow people to pay money into their pensions from small inheritances, divorce settlements, redundancy payments and other windfalls. I do not see how that could be wrong provided that the people—particularly low earners—who chose to do so received proper advice. We should also consider the transfer of limited existing pension pots into and out of personal accounts to help people with various small pension funds. Again, that is not an unusual situation.
	The Government must deliver on consolidating people's existing state pensions, including the state earnings-related pension scheme, graduated retirement benefit and the state second pension. We must enable people to see more transparently what state pension rights they have accumulated thus far, which should help to encourage further pension savings.
	We should focus on clause 3(5), which will enable employers to be exempt from the requirement to offer personal accounts if they offer group personal pensions, or GPPs. Many hon. Members agree that the exemption of GPPs from automatic enrolment, forced on this country by European laws with no control by this democratic Parliament, would be totally unacceptable. I was not at all convinced or comforted by the Secretary of State's comments in his introduction to the debate. He was quite woolly on the subject, and the Committee will no doubt want to investigate that carefully. The House should fight back and do whatever it takes to remove that EU enforced exemption and to take control of this Parliament away from unelected EU Commissioners.
	We must find a way to reject EU laws that prevent auto-enrolment into GPPs and would, as Age Concern points out, fatally undermine the principle of the Bill by encouraging employers to side step contributions in to personal accounts. That loophole must be closed.
	The Bill should protect members from excessive charging and from poor investment performance. Clause 62(2)(d) sets out that
	"the cost of membership of a scheme...should be minimised".
	We need to hold down scheme costs to an annual management charge of no more than 0.3 per cent., and less if possible. That limit should be specified in the Bill. We have specified the 3 per cent. that employers must pay, as well as many other things. Why cannot we put a specific limit on the costs?
	People must feel that saving in their personal accounts is totally secure and good value, or else the accounts will fail. People will not have that confidence at a time when, sadly, they doubt the integrity of political parties. Public trust in politicians and Government is at an all-time low, so promises from politicians will not help. People must have clear, unequivocal and permanent guarantees that their money is safe in personal accounts and that they will benefit from saving in them and not be punished through the means-tested benefit system.
	Advice will be crucial, as we have heard this evening. It is in society's best interests for the Government to ensure that good financial advice is readily available to everyone, and particularly the low-paid, as they plan for retirement. If people receive good advice and have confidence, we may see personal accounts dramatically improve the levels of pension savings in the UK. That is what we all seek. That will lead to far fewer people retiring into relative poverty and falling on to means-tested state benefits in the future.
	Finally, as I have said before, it is time to take the politics out of pensions and to give pensioners the decent deal that they so richly deserve. If the excellent people of Castle Point allow me, I will fight for the better pensions that they need month by month and year by year. I will fight to force this Government—and the incoming Tory Government whom I expect at the next election—to give current and future pensioners specific delivery of the better pensions deal that is promised by the Bill and that is so long overdue.

Richard Burden: It is a pleasure to follow the hon. Member for Castle Point (Bob Spink). I had some difficulty in reconciling his plea to take the politics out of pensions with the content of his speech, especially the early part. Time prevents me from rising to most of his points about the Government's record. I simply say that, if he was present at the start of the debate, he would have heard my right hon. Friend the Secretary of State referring to our commitment to restore the link between pensions and earnings from 2012. He may also have heard the rumble of discontent that emanated from the Opposition Benches. I heard one hon. Gentleman saying that the commitment would bankrupt the nation. If there is to be a shift in Tory policy, perhaps the hon. Gentleman should take account of it.
	The Bill represents the second stage of implementing the sort of proposals that emerged from the Turner review, and it has much to commend it. The problems, as many hon. Members have said, are stark: more than 7 million people do not save enough for their retirement, and only half those aged 35 or over and only one sixth of 20 to 24-year-olds are saving for a pension. The problem is most acute among low and medium earners.
	The Bill introduces several measures to tackle the problem, including reforming private pensions saving to ensure that qualifying workers are enrolled automatically into workplace pensions and providing for compulsory minimum employer contributions. There is much to commend both proposals, but I ask my hon. Friends on the Front Bench to take seriously some of the points that have been made, especially about the level of contribution. As my hon. Friend the Member for Aberdeen, South (Miss Begg) said, there may be a case for staging the amount, but it is important that we take seriously the point that my right hon. Friend the Member for Birkenhead (Mr. Field) made about not allowing a minimum to become a maximum.
	Although there is much to commend automatic enrolment, the relationship between that and means-testing is a genuine problem. There are no easy answers and anyone who pretends that there are has missed the point. In addressing the problem, I ask my hon. Friends on the Front Bench to consider a couple of matters. First, when the pension credit was introduced, its main thrust in the 1997 to 2001 Parliament was an incentive to save. Over time, it was merged with the minimum income guarantee, so that when people refer to the pension credit today, they tend to mean the lower rather than the upper element of it. There may be scope for reconsidering and perhaps rediscovering some of the early purposes of the pension credit to try to deal with the problems.
	Secondly, and perhaps more radically, I was struck by the point that my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) made when she rightly asked the Secretary of State to examine the position in Sweden and the value of good pension forecasts covering all elements of pension provision. The answer given was that, although there was something in her point, the pension structure in Sweden is different, and based much more on state provision. There are times when we should reassess the balance between state and private provision. Perhaps we can learn one or two things from the position in Scandinavia.
	I mainly want to concentrate on confidence. My right hon. Friend the Member for Birkenhead spoke graphically about the "walking newspapers" of the families of the 125,000 members of collapsed schemes. If their position had not been addressed, there would have been a gaping hole in confidence in pension provision in this country. I want to add my thanks to Ministers for grasping the nettle. I especially thank the current ministerial team, but I want to say something about previous Work and Pensions Ministers—one of them, now the Minister for Competitiveness, has just sat down on the Front Bench—because although I, and doubtless others, crossed swords with them for many years about the need to do more, it is fair to acknowledge that they were trying to do what they could at the time. I therefore pay tribute to their efforts, but particular credit must go to the current ministerial team for grasping the nettle and concluding the years of campaigning just before Christmas.
	The matter says something about the way in which we achieve political change in this country. It was partly to do with Ministers and partly to do with colleagues in this place, who maintained the pressure, month in, month out and year in, year out; it was certainly to do with the unions, which kept up the pressure and the campaign from outside, and with the tireless campaigners outside this place. It is worth mentioning Ros Altmann and her campaigning. Her representations were not always comfortable, but she was tenacious and her commitment is unquestioned. Ros Altmann urged us for years to consider the position of the existing assets of the failed schemes and putting them to use. That became a vital part of the Young review.
	Most of all, we need to thank and pay tribute to the members of the collapsed schemes. Kalamazoo, one of the firms whose pension fund collapsed, is in my constituency. Members of that pension fund and those of other schemes, such as that of ASW, put in effort at which many of us can only marvel at a time when they were worried about not only their futures but security in retirement for their families. They kept up the pressure and refused to take no—or even maybe—for an answer. People such as Peter Wheeler and Brian Mealings, former Kalamazoo employees, were at the centre of the campaign from the word go. It is right to pay tribute to them.
	All the people whom I have mentioned played a role in bringing the issue to a conclusion. As I said, that says something about the way in which we achieve political change in this country.
	I welcome much of the Bill. Many hon. Members referred to the detail—doubtless, many issues will be considered further in Committee. The measure will provide a framework for stronger pension provision than we have had for some time. However, difficult decisions will still need to be made, not only about what is right but about the protections that will be needed—not tomorrow or next month, but in 20, 30 and perhaps 50 years. That will need to be combined with decisions about what is affordable.
	There are many issues to consider, but I want to refer briefly to Baroness Hollis's proposal in another place. The Government presented a powerful argument about the affordability of her proposal and whether it would achieve the intended aims. However, the problem of women's pensions remains. If the method of tackling it in Baroness Hollis's proposal is not correct—it may not be—it nevertheless remains unfinished business. I hope that, as the Bill proceeds, Ministers will revert to the issue and tackle it in the coming weeks and months.

Graham Stuart: It is a pleasure to take part in the debate and to follow the hon. Member for Birmingham, Northfield (Richard Burden).
	The debate is against a background of pension tax, which devastated and undermined what at least one Labour Member recognised as one of the strongest pension systems in Europe. As my hon. Friends have said, we have witnessed the calamitous loss of defined benefit pension schemes, partly as a consequence of such undermining. The hon. Member for Nottingham, South (Alan Simpson) powerfully showed that under this Government a massive escalation in personal debt has eclipsed the amount of national wealth created in a year. We must consider the Bill, which appears to be fair and on which a degree of consensus has been built up, against that backdrop.
	The Secretary of State tried to use the consensus, which is based on the need to encourage saving for the future because things are so uncertain in the future, like a hammer to oppose anyone who questioned him. The consensus is that those with the least in our society need to have a stake in society and security in old age, but that will not come from filling in long, complicated documents to obtain their council tax benefit, to pay their rent, to purchase food or to buy a present for their grandchildren. That is the current situation, when 1.5 million or more pensioners who are eligible for benefits do not claim them for reasons that hon. Members on both sides of the House decry.
	When the Minister for Pensions Reform winds up the debate, I ask him not to suggest that anyone who thinks that there are problems with the specifics of how the Bill will work is engaged in political point-scoring, which is the last thing that anyone wants to do. I am certain that my hon. Friend the Member for Epsom and Ewell (Chris Grayling) did not seek to do that in his measured, solid and serious contribution to the debate, which, sadly, followed a weak effort, which would have been hilarious if the issue were not so serious, by the Secretary of State. The Secretary of State's contribution was poor.

Mike O'Brien: rose—

Graham Stuart: I will press on, because I want Ministers to tackle the substance of the issues.
	When the Minister for Pensions Reform intervened on my hon. Friend the Member for Epsom and Ewell, he sounded angry and indignant that anyone would suggest that there is an issue with low-paid people paying in for long periods of their lives when they cannot afford it and ending up with no benefit at the end of their lives. Surely Labour Members have some care and some concern—the old Labour party would have done so. Perhaps Labour Members of 20 years ago would have shown more social conscience.
	Few current Labour Members have worked in the private sector. It is outside their safe, cosy work environments, which are normally very close to the Labour party, so they have no idea about the harsh realities for the people whom the Labour party traditionally sought to represent. The abnegation of responsibility for those people and the failure to tackle means-testing are the central problems.
	Let us consider the reality in small firms. Again, I understand that Ministers have no understanding of what it is like to run or work in a small firm, because so few Labour Members are involved in private business. The 3 per cent. contribution by small businesses may have a serious short-term impact, as the final Pensions Commission report stated, but ultimately it will come out of what would have gone in pay to the employee. The money will not magically appear from the employer's secret pot. Employees of small businesses are often on low earnings and might have student debt or credit card debt, which has been promoted in the past few years. The employer will have a conversation with an employee who earns £16,000 a year about whether that employee should take out one of the pension schemes. Can any hon. Member on either side of the House say that they would advise someone who earns £16,000 a year and whose career trajectory does not suggest that they will ever earn vastly larger sums that they would be better off contributing towards the scheme, when we have no vision of a future picture of means-testing?
	The Secretary of State lashed out angrily, but he gave us no light. We need certainty and a consensus on what will happen with means-testing over the next decade so that people can make a rational decision about whether they should proceed. The truth is that many people who should be saving for their pension will not do so, because it will become known that it is not a wise thing to do. Ministers have singularly failed to tackle that issue.
	Turning to the powerful and devastating speech by the right hon. Member for Birkenhead (Mr. Field), we are at risk of a double whammy. Ministers are laughing, because they are so out of touch with ordinary people that people making contributions and losing out is of no matter to them. They say, "The consensus is all. We must be seen to take action." We face levelling down, because the minority who currently have decent pension provision in the private sector will see it decrease and the contribution by employers reduce in tough times. At the same time, those who should not be contributing to such a pension will be doing so out of very low earnings, when they have high levels of personal debt and their personal situation does not suggest any long-term benefit to them. They will do so, and will lose out. If Ministers do not take some of the issues raised across the House seriously, we could end up with a Bill that causes double damage to the British pension system.
	Another topic that we have not heard anything about—I will be interested to hear from the Minister about it later—is protection. It is easy for us in this House to say, as the hon. Member for Aberdeen, South (Miss Begg) and other hon. Members did, that pensioners must be protected. Quite right. We all want them to be protected, but how will they be protected? What is there in the legislation that gives them protection? We have heard the rosy views of Ministers about what the return will be on the investment of the moneys put into this fund, or some aspects of it, but what if those returns prove to be disastrously poor? What guarantees are there? We could end up with a triple whammy, where people on low earnings who have made a contribution receive very little back, and who end up finding that the money they have invested has also done extremely badly, so that they lose out yet again. It is a serious issue, and I hope that the Minister will return to the question of what we can do to guarantee the benefits for people who invest in such a way.
	I have to disagree with my hon. Friend the Member for Castle Point (Bob Spink), who suggested that it should be easy for us to support the idea of people being able to contribute lump sums—although he did say, to be fair, that they should do so with the right advice. Having read the Bill, and on the basis of the provisions we have seen so far, we can have no certainty about such advice being properly available for those who are most vulnerable and likely to take a bad decision. Without that certainty, and reassurance on that point, we should not support a measure involving lump sums.
	The Secretary of State talked about auto-enrolment. He said that it would be extremely difficult for someone to opt out. We have just talked about the many people who could find that it is not in their financial interests to opt in finding it extremely difficult to opt out. I would like the Minister of State to expand on what is meant by that, and on what the mechanics will be to prevent it from happening. I expect that there will be a form. Many employers of people on low earnings, or of part-time workers, women workers or people with broken careers, would be quite likely to have such a form available in a filing cabinet. They will pull it out, put it on the table and say, "What do you want to do about this reduction of 4 per cent. from your earnings, then?" The answer will be, "I'd rather not have that loss of 4 per cent. when I've got credit card debts, Christmas coming up and I'm in serious financial difficulties trying to look after my family."
	The truth is that such a form will be on the table. It will not be extremely difficult; people will just sign it. We then have the prospect of Ministers of this Government—it would be sad if they were still in power—desperately going round trying to prosecute employers for their irresponsible encouragement of people opting out of a scheme, which, as far as their employees are concerned, is highly unlikely to be of benefit. I will be interested to hear the Minister respond on that point.
	It is in the detail that we will find out whether more people will benefit from the scheme than lose out because of it. Much of that detail is left to regulation, and we could do with hearing from the Minister—we did not hear from the Secretary of State—about whether regulations will be subject to affirmative resolution, or whether the Government will be able to push such measures through. This matter will be of enormous importance for millions of people for a long time, and it is important that the House scrutinises any regulations made by Ministers.
	The right hon. Member for Birkenhead described this Bill as dangerous. He suggested that there was a chance of a serious mis-selling scandal, but there would be no one to take to court over it, apart from a discredited Government who would be long gone. That is no position from which to move forward on the basis of consensus for the long-term benefit of people in this country, not least those who have least, whom we should be concerned about the most. One would have thought that a Labour Government would be concerned, but, as my hon. Friend the Member for Castle Point pointed out in his powerful speech, the amount spent on the elderly by the Government as a percentage of GDP has reduced over time. This Government need to take seriously all the contributions made, and the criticisms of the current situation, if we are to have a proper set-up for the future.

Nick Palmer: If the previous two contributions from the Conservative Benches reflect a wish to take politics out of pensions, I would not like to see the Opposition in partisan mode.
	One thing that has not been said yet is that we should give credit to Adair Turner, as well as to the Government, for the degree of consensus that has been achieved. Despite all the criticisms that we have heard today, they focused on the detailed implementation of the scheme, but a couple of years ago I would not have put money on our achieving any consensus on the structure at all. It is worth recording that before moving on.
	I should like to make three points. The first is about the issue that has preoccupied many hon. Members who have spoken—the interaction with pension credit, housing benefit and council tax benefit. We are all familiar with the arguments about means-testing in general. There will always be a trade-off between spreading whatever money we have thinly and concentrating it on the people most in need, with the risk of creating a trap if they then receive additional income. That is a long-standing issue. It is not trivial and it will reappear in other contexts. However, we should be clear that all such devices are designed as a safety net. Nobody sensible aspires to ending up on housing benefit and council tax benefit, which are there in case things go wrong in people's lives.
	A constituent once told me that it was not fair that she contributed so much in tax to the national health service, because she had never been in hospital. I told her that it was good news that she had not been in hospital and that the NHS was there as a back-up in case of bad news. We do not tell people considering signing a personal account that a huge profit is guaranteed at the end of their lives; rather, we say that if their careers follow a normal pattern—even a low-earning pattern—and they contribute over their lifetimes, the probability is that they will be glad that they did so. However, if things go horribly wrong, either in people's investments or their personal lives, that safety net is there.
	That is a reasonable package, although I appreciate that there are issues for people who are close to retirement when the scheme comes in. In the interests of securing a high take-up for the scheme, we should try to address the concerns that have been expressed today.

Gregory Campbell: The hon. Gentleman talks about the safety net and I take his point on board. He refers to our telling vulnerable groups—women, low earners and people in part-time employment—that the safety net is there, but does he not understand that, for various reasons, those people do not listen whenever we say such things? All our cogent and logical arguments are lost on many people, for an abundance of reasons that we all understand. Therefore, however logically we put the case, many tens of thousands of people will miss it.

Nick Palmer: That is right, which is one of the arguments for the opt-in. We believe that there is a logical and serious case, which many people for whatever reason do not take on board, so it is reasonable to make it the default position that they become part of the national pension scheme, rather than staying outside because of misplaced or other fears and just hoping for the best. However, as I was saying before the hon. Gentleman's intervention, we need to do what we can to reassure people on those points.
	The second issue that I should like to raise is employer evasion. We are making the scheme compulsory for employers, but we are all aware that some employers will, for good or less good reasons, seek to minimise the number of employees for whom they pay a 3 per cent. contribution. As I mentioned in an intervention on the Secretary of State, it seems reasonable to ask in Committee why employers are being given a financial incentive to encourage their employees to opt out. Why should not every employee be part of the national scheme? The optional element would be paying the 4 per cent. and receiving the 1 per cent. tax rebate; the 3 per cent. would be paid by employers regardless. From the employers' point of view, the issue would be entirely neutral. They would not be concerned about whether or not people signed up—that would be a matter for the people concerned—and there would be no risk of the "wink and nudge" influencing people. I agree with the hon. Member for Beverley and Holderness (Mr. Stuart): employers will have a sheaf of forms to offer employees asking them whether they want to be part of the scheme, and the less good employers will nudge them in a way that is impossible to prove or to catch.
	I am pleased, as I know my trade union colleagues will be, that agency workers are covered by the proposals in what I consider quite an elegant way, but there remains the problem of self-employed workers. We all know of the increasing tendency for some companies to farm out important elements of their operations to people who are at least nominally self-employed, and we do not want to reinforce that tendency by giving an additional incentive for the establishment of such arrangements. However, it would be helpful if there were ways of bringing self-employed people into the scheme.
	My hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) referred to the Swedish yellow envelope scheme. In today's debate, we have still subliminally accepted the traditional model according to which people spend most of their lives working for one employer, but that is now very much the exception. The norm is that during their lives people work for a number of employers, perhaps a dozen or more, experiencing voluntary or involuntary interruptions in their employment. In such circumstances, it is easy for people to lose track of their pension rights. The attraction of the Swedish scheme, as I understand it, is that people receive annual statements providing an overview of their position.
	I appreciate the Secretary of State's point that in the absence of a defined benefit scheme it is not possible to tell people that, in the present circumstances, they will receive X pounds a week. However, they can be told "Here is an overview of what we have on record for the pension schemes to which you have contributed so far, and a statement of the current assumptions of what that could lead to", with all the usual provisos issued by pensions firms; only the Government, or a Government-appointed agency, could do that.
	It would be a real, visible, concrete service to British citizens if, as part of the package of being British, they received a statement from the British Government every year telling them where they stood in terms of pension provision. I think that it would stimulate saving without imposing an administrative burden on pension funds. They have to collect the information anyway; it is just a matter of passing it on. I believe that this is something we could do to help people make sense of the complex world of personal finance—which, up to now, many have struggled to do.

Steve Webb: I shall focus on just one issue in my brief speech. I shall return to where the Secretary of State began—the issue of women's pensions, which has been touched on throughout the debate.
	I want to be helpful to the Government for two reasons. I thank the Secretary of State and, through him, his officials for the constructive dialogue in which I have been able to engage with him in recent months on a range of matters related to women's pensions, and for the efforts that he is now making to help resolve some of the technical problems connected with home responsibilities protection. I thank him and his officials for their constructive approach. However, he has, with due deference to the noble lady, what might be called the Baroness Hollis problem. Last summer, the Government were defeated in another place in the attempt to do something about the 2010 pension changes and the issue of women who retire before 2010 on a much less generous state pension regime. Baroness Hollis came up with one suggestion that the Government said they would do something about. They looked at it and have said that they will not do something about it. I want to offer the Government a way out and to offer my solution to the Baroness Hollis problem. I do so in a constructive spirit and, as the Minister knows, I will be happy to speak to him at great length about it if he wants.
	After the announcement in the Lords that no progress was going to be made on the issue, Jackie Ashley wrote a column in  The Guardian on Christmas eve describing what a problem this was. As I had nothing else to do on Christmas eve, I wrote to  The Guardian and my letter was published a few days later. I pointed out that there were a set of women with gaps in their national insurance record who could do something about it now if only they knew about it. Interestingly, I read  The Guardian letters column a few days later and found that a citizens advice bureau manager had written to say that I was right—it was a good letter, obviously. She said that even she had no idea that people could fill their national insurance record gaps on those special terms because the system was so complicated.
	Baroness Hollis is trying to address the problem arising from the fact that many women are approaching, or have passed, pension age, have gaps in the national insurance record and could fill them, but have not done so. We need to use the existing mechanisms to enable women to fill those gaps.
	As the Secretary of State said at the start of the debate, women—we are principally talking about women—can fill up to 12 years of contributions' gaps now. We are in 2008, and one can pay back for any of the last six years, which takes us back to 2002. Between 1996 and 2002, there was a different mess; the Government were not telling people about such gaps in the national insurance record. To make up for that mess, there is a special scheme that allows people to pay back from 1996 to 2002. The problem is that lots of people do not know about it. I have set myself the goal of trying to find them individually. This might be slightly adventurous and I would like to enlist the Minister's help in the process. I have found a few so far, but there are a few still to go.
	My serious point is this: the Government hold records on everybody's national insurance, so they hold records on all of those women who have gaps in their records for the years for which the special scheme applies and since then. If those women knew that they were entitled to fill the gaps in their record on these very favourable terms, many would do so. I have found dozens of such women who, when we have told them about the scheme, have found they could get, literally, free money. They have found out that they could pay a couple of thousand pounds in back contributions and earn £3,000, £4,000 or £5,000 in back pension. The scheme is so generous that the Government do not even ask them for the money and simply pay the difference.
	I have had the pleasure of ringing up women the length and breadth of Britain—I have had several proposals of marriage—and helping them to discover that they could have free cash and a bigger pension. The problem is that the Government know exactly who they all are. They never told one set of women and they told another set but only once, several years ago, and in a somewhat complicated way. All those women have that latent entitlement that they are not taking up. The Baroness Hollis problem—the problem of lots of women with incomplete records who could fill them—could be made much better if the Government were to access their own records proactively and contact the women who are missing out.
	Very briefly I shall identify the two groups about whom I am most concerned. The first are the women who did not get a letter from the Government telling them about gaps in their record. Such women are perhaps atypical now but are typical of a generation of women who left school at 15, worked full-time and paid some national insurance, left work to have children, went back for a period and paid the married woman's stamp, but perhaps stopped altogether when they had other children. They might work in Oxfam, or they might care for an elderly relative. Basically, their working lives stopped in 1980. In other words, they have a dirty great gap in their contribution record.
	A few years ago, the Government took the view that they would not tell these women that they were entitled to fill the gaps in their record on very favourable terms. The scheme is brilliant and the Government know all the women who are entitled to it, but they chose not to tell them; they did not write to them. This set of women could benefit if the Government used their own information to tell them. I am not asking for legislative change. All the information and powers are there and the Government just need to tell the women. Even if the Government were simply to prioritise those who have most to benefit from the scheme, that could help a lot of the women whom Baroness Hollis is concerned about to get better pensions.
	The second group is the women the Government did write to in 2004-05. Some of them responded, but, even on the Government's own figures, tens of thousands have still yet to respond. There is a ticking time-bomb in that there is a deadline, as the Minister well knows; the scheme will run out by 2009 or 2010. There are lots of women out there who could take advantage of it. I find them practically every day—the Minister looks mildly sceptical, but I can give him names and addresses. Practically every day I find another woman who could take advantage of the scheme and who received the initial letter and either did not understand it or, crucially, received it at a time when it was not right for them to respond. They might have been 60 when they received it and they did not have the £2,000 but they are now 64 and it is worth their while to respond, as they will get the offset and they will end up in cash. So it was right for them not to respond when they received the letter, but I would bet any money that they binned the letter because they thought, "I haven't got thousands of pounds," instead of putting it in an envelope marked, "Open again in 2008 when it is worth while." The Government know who those people are.
	There are a lot of women of the type whom the noble Baroness is rightly concerned about—as is the Minister, and as am I—and whom the Government could help without a massive spending commitment. Of course, some money would be involved.

John Barrett: Will my hon. Friend give way?

Steve Webb: I had better not, as I am pressed for time.
	The critical point is that the Government know who these people are; they have their records. Even if they identify only those who could most benefit from the existing schemes, they would do a huge amount to address the concern that is felt in all parts of the House about women who have incomplete records, often because they have done something that was very worth while which has not been reflected in their pension benefit.

Sally Keeble: I also want to pay tribute to Front-Bench Members for their outstanding work in tackling pensioner poverty, and in particular in dealing with issues to do with women's pensions. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) said to me earlier that there are many men in the low-income pensioners pot as well, which is of course right, but the figures show that the pensioners who are in poverty and who particularly miss out are overwhelmingly women.
	The Government have done two particular things to help them. One is the much-reviled means-tested benefits, especially pension credit and the minimum income guarantee; many of those payments have gone to women pensioners and have been responsible for lifting them out of poverty. The other was to commission the Turner report, which produced excellent proposals on women's pensions. It highlighted two issues. First, it identified that one of the main reasons why women pensioners were poor was that they were not qualified for the state pension. In the last round of legislation, that was addressed by reducing the number of years needed to qualify. In addition, there is, of course, the changing demographic profile and the change in women's status which means that more of us now work for longer. As a result, by 2025 more than 90 per cent. of us will be entitled to a full state pension. That is a major plank in getting women pensioners out of poverty.
	The second particular cause of pensioner poverty for women that the Turner report identified was the fact that many women do not have pensions linked to their work—in the past, the term for that was occupational pensions. The Bill is particularly important as it will bring in the mechanism that will give women—especially those on low incomes—pensions that are linked to their work. That obviously raises a lot of issues, which I want to discuss. It will impact on their ability to get means-tested benefits, which have kept up women's income in retirement. However, it is right that we say that there will have to be a fundamental shift in pension provision such that people start to save even if they are on a low income. That will mean that people will have to start looking at saving, which will be the ultimate way in which they will achieve security in retirement.
	Members have talked about incentives to save, and as I know from personal experience, the best incentive is to say to people, "You put so much in the kitty and your employer will have to put in so much, and the Government will put in so much." That is a basic incentive to save. I speak as one of those women who missed out on their state pension, for all the reasons that the hon. Member for Northavon (Steve Webb) identified.
	I want to touch briefly on three of the various issues relating to personal accounts, which I hope Ministers will look at. It is important that personal accounts work for people on low incomes who have never saved for their retirement before, particularly women. I understand from looking at the figures that people will get the full benefit of personal accounts only if they have their basic entitlement to a state pension; it is not a requirement—it is just the way that the figures work out. That is why it is particularly important that in paving the way for this provision we ensure that pensioners can buy back missing years. I take the point made by the hon. Member for Northavon about the schemes that are open; when people get such letters—I get them—they think, "I'll worry about that later." It is important that the issue be dealt with so that women can buy back the missing years from the early years of their employment, which are often the years that they miss. They also need to be able to buy back enough of the years to ensure that, if they have the means, if it suits them and if they think it the right thing to do, they get the full state pension. I will not go into the figures in detail now because my time is limited.
	Secondly, the provision must work for women who have more than one job. Women in my constituency who have always worked and have a record of being in paid employment will often make up their income package through a basket of different jobs, all of them quite small and some of them not very well paid. It is particularly important that those women also get the full benefits of the personal accounts, which perhaps means some tweaking of the requirements.
	Thirdly, perhaps women should be able to vary the amounts that they pay into personal accounts, so that they can buy back years when they were unable to pay in as much. Women's employment goes in peaks and troughs—often troughs. When one occasionally hits the grassy uplands of having some money, it is very important to be able to make provision for one's retirement, particularly given that, as we know from research, women, when there is choice between their pension and their children, have a tendency to ensure that their children get the money. We therefore need to ensure that the patterns of how women save and work are properly reflected in the structure of the personal accounts. It is particularly important that these accounts perform the miracle of getting people who do not have a track record of saving to save not for a rainy day, for a holiday or for their children, but for their retirement.
	We must also make sure that while this is going on, other elements of what the Government are doing do not damage women's pensions. Let me give an example. A constituent came to see me—she is between 60 and 65 and her husband is over 65—to explain that the tax on her quite measly pensions is doubling. She is losing the 10p starting rate, which is going up, and she will not get the benefit of the increased personal tax allowance for pensioners. So whereas this year she is paying, as it says in a letter that I wrote to the Treasury, a total of £132 in tax, next year she will pay £261.40 on her pension income of £6,545.20.
	I ask that while we do all this good stuff through the Department for Work and Pensions and this legislation to bolster women's savings, we ensure that other bits of Government policy do not penalise women because of differences in retirement age and such like. It is not enough to say that the husband gets the benefit, because the argument about women's pensions is about poverty and equity. Women expect to be treated as individuals when they have retired as well as when they are employed. With those caveats, I welcome the Bill. I hope that we can fine-tune those small bits in Committee to make it work for women.

Gregory Campbell: I join other hon. Members in commending the Ministers and officials responsible on the successful outcome on the collapsed pension scheme. The broad thrust of the Bill is imaginative. The time bomb that has existed for many years was, as several hon. Members said, like a nettle that had to be grasped, and the Government are to be commended on grasping it.
	None the less, my concern about vulnerable groups has not been assuaged, even though I have listened to Ministers and various Labour Members elaborating on it. Many hon. Members have said that we are talking about a group of people who have no interest in pensions. The people involved are mainly female, many of them are in low-paid and part-time employment, and some of them are in periodic bouts of employment. No matter how much we say that an interest in pensions is desirable and beneficial, and is in their own financial interests, they are simply switched off to the concept.
	Until we change that mindset, and however much we establish even the automatic enrolment, if an opt out is available on the basis that a small employer finds that it would be advisable and advantageous, at least in the short term, for the employee to avail of it and that that would save the firm and the employee some money, and if it is a matter of signing one or several forms, the onus and incentive will be on that employee, who may have no interest in the concept anyway, to sign the form to secure what they believe to be a short-term gain.
	Many other employees stand to benefit if gaps can be filled through the delivery authority. More clarity is required in that regard and I hope that will be provided as the various stages of the Bill unfold. We need to get a Government response on an issue that has been raised by several hon. Members. If we go through the pain—I believe that it is right to do so—of automatic enrolment and we help most people in society, that will be good and beneficial. However, if a hard core of female, part-time and low-paid employees see this as not being a desirable process for them to engage in, if we miss them and still do not target them, and if they are being told, and they are saying, that there is no point anyway because they will be no worse off opting out from a process that they do not feel part of anyway, that will only compound the problem that the Government tell us they are attempting to address. I want to see and hear more tangible ways of ensuring that that hard-to-reach section of employees will be reached as a result of the Bill. If we can achieve that through a process of Government engagement with the various parties, that will be progress made.
	I listened with some interest to the hon. Member for Northavon (Steve Webb) who spoke of the women who do not have pension entitlement because of the national insurance contributions issue. I hope that the Government will respond positively to those points, but if they do not I and other hon. Members will be in touch with the hon. Gentleman to see how we can help those women. The Government should be targeting and writing to those women to ensure that they get their entitlement.
	If the points that I have made can be met, I hope to be able to give my unambiguous support to the Bill. As things stand, I welcome the measure in so far as it goes.

Quentin Davies: I shall start with the Opposition, because we had a truly characteristic and classic performance from their Front Bench this afternoon. We heard a lot of vituperation and aggressive epithets, but no policies, no ideas, no commitment and no sense of conviction. I shall give some concrete examples.
	We all know that means-testing is a problem and poses potential difficulties, but should we have it or not? We heard a litany of complaints about means-testing, but no indication of whether the Conservatives would abolish means-testing or increase its use. We all know that generic advice is not ideal and it would be splendid if we could pay for everybody to have customised advice. The Opposition complained about the generic advice proposals in the Bill, but they did not say whether they thought that the taxpayer should pay— [ Interruption. ] They do not like being criticised, but they must understand that they will be. I see that the Opposition Chief Whip is now to be my audience on behalf of the Opposition. We never heard what their view is on generic advice. Would they prefer the Bill to provide for customised advice? In that case, who would pay for it? We did not hear that. Or do they want no advice at all? I presume that that is not the case.
	Another example is automatic enrolment, about which we heard much from the Opposition spokesman. He mentioned it over and over again and appeared to be totally against it, but he never said that he would table an amendment to remove it from the Bill. There was a complete abdication and a void where we should have heard some solid and concrete proposals from the Opposition if they want to be taken seriously. It is no use just complaining about things or saying that life is not perfect. We all know that life is not perfect. Compromises have to be made and decisions taken. If one wants to be in government, one has to be prepared to face decisions and come down on one side or the other. We had none of that.
	By contrast, the Government deserve to be congratulated on the Bill. It is a historic Bill. It is the first time in our history that we will have a contributory pension scheme that covers the whole work force, every man and woman who is working, unless they specifically opt out. That is a special moment in the history of pensions in this country. It means that everybody who is working will have a stake through the contributory pension system and the equity market in the prosperity of this country. Indeed, through the international equity market and diversification, they will have a stake in the future wealth of the world, and that is enormously important.
	In another important achievement, the Government have succeeded in doing something that no other Government have even attempted, which is to provide for compulsory employer contributions. What is more, the Government have managed to do so through negotiation, and that is a fine achievement. Many people would not have put the Government's chances of success very high, but they have succeeded. It is against that background that I wish to make one or two points on issues that are left open by the Bill.
	We all agree that there is a problem with means-testing. Some people should not contribute under the scheme because they would be better off relying on means-tested benefits. But the important point is that they are in the minority. It would not be sensible to throw the baby out with the bathwater and say that because that minority will not benefit we should deprive the majority of these new, positive measures. It is however right that some flexibility should be provided, and the Government have done so in allowing people to opt out and through the provision, which the House has so far rather missed in the Bill, for trivial commutation. However, the amount is not actually trivial; it is £16,000.
	To take a concrete example: at 8 per cent. the total contribution of someone on £20,000 will be £1,600 a year, so it would take 10 years of cash contributions to reach £16,000. Making a reasonable assumption about the normal market return of those contributions, and as compound interest is rather low at the beginning of a contributory scheme, it would be about eight years before there was any danger of someone losing contributions at all now that the Government have provided for a so-called trivial commutation level of £16,000. That gives people a long time to think again in the light of changing personal circumstances or different rules about means-testing or pension contributions.
	Finally, I should like to express something that the Government may not be able to say so easily. I have no idea what is in their mind on the matter and no idea of the substance of their discussions with the CBI and employers organisations, but it seems to me highly desirable, and natural over time, that the 3 per cent. compulsory contribution by employers should increase. The Australian superannuation system is interesting. It started at less than 3 per cent.—it may have been only 2 per cent.—but has risen to 9 per cent. over many years; there has been only a slight increase in the burden each year so that it could be absorbed. The House will see immediately that in so far as the compulsory and global contributions increase from a total of 8 per cent. at present to 10, 12 or 15 per cent., we will reach a point when not only will the proceeds of the sums invested through the contributory scheme in terms of an annuity available on retirement be much more significant than at present, which is highly desirable from all obvious points of view, but the means-tested problem will have been relatively eroded over time. Fewer people will find themselves in the perverse situation of having no incentive to contribute to the scheme.
	It would of course be highly desirable if the Government could make sure that in future there will be no increase in means-testing, as that would go against the whole logic of the scheme. I congratulate them on a major move forward in that regard, for which they received little credit in the debate—deciding to restore the link between earnings and the contributory national insurance pension. That is an anti-means-testing measure and will enable people to improve their pension income globally without its being negated by the loss of pensions elsewhere through the means-tested system.

Hywel Williams: We welcome the Bill, albeit with some reservations. Many of us have long awaited consensus on pension provision after the difficulties and complications of the past 25 years, beginning with the Thatcher Government's disastrous decisions about the state earnings-related pension scheme and the breaking of the link between pensions and earnings.
	In the interim, pension provision, particularly for the least well-off, has too often been characterised by confusion, missed opportunities, mis-selling and sharp practice or, disastrously, no provision at all for many people, including many of the self-employed, some of whom are my constituents. That has left pensioners with a well-founded sense of grievance.
	Unfortunately, public trust in pensions in general has been undermined, which is reflected in the growth of forms of investment that are obviously less safe. Recently, I was ill for a week and watched some daytime television. I was amazed and dismayed by the property programmes, because so many people thought that investment in what looked like extremely dodgy foreign property would be a more desirable nest-egg than investing in a pension.
	The Bill has particular relevance for Wales and Scotland. In Wales, we have proportionately more pensioners and lower pensioner incomes, and there is significant under-claiming of means-tested benefits. Twenty-two per cent. of Welsh people are over 60 and the number is projected to rise to 29 per cent. in 20 years' time. Many of those people will be very elderly and, as we know, elderly people have smaller incomes.
	Pensioner incomes in Wales and Scotland are lower than those for the UK as a whole. Let me give some figures for the past three years. The net income per week for pensioner couples is £338 in Wales, £347 in Scotland, £365 in the UK and, interestingly, £445 in south-east England. Single pensioners' net weekly income is £164 in Wales, £170 in Scotland, £171 in the UK as a whole and £189 in outer London. Obviously, we would welcome any steps towards improving pension provision, particularly for the less well-off. I have not even taken account of lifespan issues, which are particularly relevant.
	I am glad to say that there has been great progress in reducing poverty in Wales in the past 10 to 15 years, not only in income terms, but through measures such as free bus travel for pensioners and free prescriptions for all. In 1995, a quarter of low-income households in Wales were pensioner households; now it is a fifth. The figure is down from 25 per cent. to 20 per cent., which is welcome. However, 150,000 pensioners in Wales are still in poverty. Significantly, 30,000 of them would be lifted out of poverty if they took up in full the means-tested benefits to which they are entitled. I shall make a general comment, as the Secretary of State for Work and Pensions is also the Secretary of State for Wales: given that the Government are irrevocably wedded to means-tested benefits, I would welcome a vigorous take-up campaign to make sure that pensioners take up the money to which they have a right.
	Hon. Members will have heard the Minister for Pensions Reform assert in Question Time that the start date will not slip from 2012. I hope that he will not regret those words at his leisure. I also hope that he will reassure the House that employers will not see the Bill as an opportunity to establish a ceiling, rather than a floor—a point that other hon. Members made, too.
	I now turn to my main concern, which is the relationship between existing provisions, particularly means-tested benefits, savings and other pension provisions. That relationship can seem fiercely complicated to many people, and that leads to confusion, badly uninformed decision making and subsequent potential loss of income. The advent of personal accounts may complicate matters in the minds of some people. There must be careful consideration of the relationship between personal accounts and means-tested benefits, not least, as has been said, to make sure that it pays to save.
	Many years ago, I was involved in advising claimants. Some hon. Members will remember the infamous "better-off" calculations that we used to do, to determine whether people were better off on unemployment benefits or family credit, as it was then called. The calculations were fairly complicated for benefit advisers, but for ordinary claimants they had the character of one of the lesser branches of mediaeval theology; people just did not understand. I repeat the plea for the wide availability of good-quality information. Advice must be available, and not just from the personal accounts delivery authority. As the Minister will know, Age Concern is pressing for that, as are other bodies. People will need detailed, clear, face-to-face advice, if that is possible. It is expensive, but we are talking about people's income for the far future. The advice should cover all provision, including savings, and not just personal accounts.
	Lastly, I have two points of a more local and domestic nature. I shall take this opportunity to make my traditional demand that all the information and advice services in Wales be made available in Welsh and English, particularly given the linguistic preferences of many of my constituents, and the linguistic preferences and abilities of some older people in Wales. I urge the Government to liaise with the Welsh Language Board on those matters at an early stage. Finally and happily, I am sure that the Minister will welcome the announcement at the weekend of the appointment of Ruth Marks as Commissioner for Older People in Wales—the very first such commissioner in the world, as far as I know. The commissioner is appointed specifically to work on the remit of the National Assembly for Wales. However, I hope that the Government will assure us that they in London will not raise artificial barriers, but will work closely with the Assembly and the commissioner on matters to do with older people.

Harry Cohen: This is a genuine attempt by the Government to tackle the serious problem of under-saving, too few contributors and insufficient contributions. Some 7 million people have not saved enough for their retirement. Half of them are over 35, and only a sixth of 20 to 24-year-olds are saving for retirement. Only 40 per cent. of people earning between £5,000 and £30,000 a year are saving towards their pension, so there is a serious problem.
	In the short time available, I shall make some brief points. First, contributions are too low. Turner said that contributions of 8 per cent. would bring about a 45 per cent. replacement rate—someone's pension level, compared with what they earned—which is a long way from the figure of two-thirds that most people regard as acceptable. I think that the figure will be much lower, because someone who has not saved enough at 30 will not get anywhere near 45 per cent. There will be much less for people who have undergone periods of unemployment. The figure depends on unspecified stock exchange gains and on administrative charges being kept down. That might not happen, so it is likely that employers' contributions will have to be increased. The state may have to target measures on low-paid and older workers. Tax relief of 1 per cent. may not be enough, especially for the low-paid.
	Those on low incomes are of most concern to me. They may not benefit as they should—in some cases, not at all—from the personal accounts system. People may be ineligible because they are too poorly paid and have multiple jobs. The way in which the system has been set up is wrong. Individuals who are over the lower limit—perhaps they have two jobs—will not receive money from their employers to match their contributions, which is not reasonable. A great deal has been said about the issue of older women, who have sought entitlement to a higher basic state pension. It is not right that the Government should cut their options and not provide that higher basic state pension. I hope that the Government will make a commitment to return with proposals to help those women increase their pension entitlement.
	The relationship with the means test is important. There are two splendid articles by experts in the current edition of  Parliamentary Brief. May I say to Ministers loud and clear that saving must be worth while for low-paid individuals who contribute to personal accounts? It is not right that they should be caught up in the means-testing problem and end up with nothing. I urge Ministers and the Secretary of State to look at the issue to ensure that they get something. Hopefully, the Bill can be changed in Committee or afterwards. I agree with the point that my hon. Friend the Member for Luton, North (Kelvin Hopkins) made about higher-rate taxpayers. The Bill provides for the overall reform of pensions, and for them to be left out so that they can carry on receiving their £21 billion or whatever—the figure is in the tens of billions—is not right. The overall reform package should be skewed towards low earners so that, to coin a phrase, we end up with pensions and pension tax relief for the many, rather than the few.
	The Bill is a laudable effort, but significant reform was required, not just because of the crisis in savings for retirement but because of the other side of the balance sheet. We are going to raise the state pension age, which will go up to 66 in 2024; to 67, 10 years later; and to 68, 10 years after that. Those changes might not have consensus anyway, but they certainly will not if the other side of the reform package is not generous enough. Again, I urge Ministers on the issue. There are still issues of differences in life expectancy and health inequalities, especially for the lower socio-economic groups, and they must be addressed. I am concerned that the raising of the state pension age will affect the poor the most; one independent organisation said that it would be immoral to force the poorer sections of the population to wait longer for their state pensions just to save those who are richer some tax. As I said, the reform needs to be much more substantial for the socio-economic groups at the bottom of the ladder.

Nigel Waterson: It is always a pleasure to follow the hon. Member for Leyton and Wanstead (Harry Cohen), who always speaks with total conviction on these matters. This has been a wide-ranging debate and I thank all hon. Members on both sides of the House who have taken part.
	As we enter a new year, we see that the Government have learned nothing new. The age of spin is still alive and well. In his press release about the Bill, issued this morning, the Secretary of State seemed to be in total denial about the real and current problems in pensions. In it, he talked about the
	"nightmare of a future pensions crisis".
	Does he not know that the crisis is here and now, and has been for some time? Does he not realise that savings in this country are at their lowest since the 1960s—a point touched on by the hon. Member for Nottingham, South (Alan Simpson)? Does he not remember that just before Christmas he and his colleagues were finally forced into a humiliating U-turn over the 130,000 pensions victims? I do, however, join my hon. Friend the Member for Epsom and Ewell (Chris Grayling) in paying tribute to the Secretary of State's role in persuading the forces of darkness in the Government to relent on the issue.
	Does the Secretary of State not know that nearly 2 million pensioners are living in poverty and that the worst-off pensioners are getting poorer in real terms? He has talked about restoring the earnings link for the basic state pension, but he still will not tell us when that is going to happen— [Interruption.] If the Secretary of State wants to intervene, I shall be happy to give way. He talks about taking action, but his Government have been in power for 10 long years, having presided over the pensions crisis and been responsible in some measure for it.
	In his press release, the Secretary of State also holds to the line that personal accounts will come into effect from 2012. Is he really still in a position to make that remark in the light of the comments of the new chief executive of the personal accounts delivery authority on Radio 4? When that point was put to the Minister for Pensions Reform, he was good enough to say that he had told the chief executive in no uncertain fashion that he, the chief executive, would introduce them in 2012. That is the equivalent of the military saying, "Take this objective or do not come back alive." It would be interesting to hear in the Minister's winding-up speech what response he got from the new chief executive.
	We shall have more to say in Committee on the role of PADA, the principles that should drive it and the criteria for its success. Simply to increase the number of savers without substantially increasing the overall amount of savings in this country would clearly constitute failure— [Interruption.] I welcome a former and distinguished Pensions Minister, now the Minister for Energy, to our debate.
	One of our main concerns is about so-called levelling down, which was mentioned by the hon. Member for Aberdeen, South (Miss Begg) and my hon. Friend the Member for Castle Point (Bob Spink). Let me be clear about where we stand on the issue. We do not wish to see anything in this legislation that might give extra encouragement to an employer already making more generous contributions than those envisaged in personal accounts to close an existing scheme. PADA must focus on its target group—predominantly those on low incomes with no or inadequate pension savings. That is a real concern, not one dreamt up by the Opposition.
	The Pensions Policy Institute has set out various scenarios in a recent report, rather snappily entitled "Will Personal Accounts increase pensions saving?" One of the models that it comes up with is very sobering, but it considers a range of possible scenarios, the most pessimistic of which could result in only 4 million to 5 million new savers in work-based pension schemes. It notes that there is a lot of uncertainty about how employers will respond to the reforms, and goes on to say:
	"This poses the question of whether the reforms would be considered successful if they did not increase annual total pension contributions but did increase the number of people saving and made the distribution of saving more equal."
	Soberingly, under its pessimistic scenario, the overall size of pension saving would shrink, despite a healthy amount of personal accounts, because of the levelling-down effect on existing provision. Ministers need to think long and hard about how we do what we can to ensure that that scenario does not come to pass.
	After five years of a rearguard action, the Government have finally agreed that the 130,000 pension victims should get proper compensation. Ministers seem to think that they deserve three cheers for that, but it has taken far too long to face up to doing the decent thing. Let me remind the House that in the meantime some of the victims have died, others have had to work beyond normal retirement age, sometimes with serious medical conditions, and all have faced the prospect of penury.

Frank Field: Is not there an important distinction to make in charging the Government with failure to act sooner while congratulating the current two Ministers who were successful where previous ones failed?

Nigel Waterson: I am happy to accept that form of words, because it summarises what I have been trying to say and what my hon. Friend the Member for Epsom and Ewell said in opening the debate.
	There is nothing about those victims in the Bill as it stands. It could have been in the previous Bill if hon. Members had voted for our lifeboat amendments or had been given the chance to include it by the Government. However, we will consign that to history. What we want to know now is when the relevant amendments to the current Bill will be tabled. Provided that the small print delivers what Ministers have promised, we can assure them that that part of the Bill, at least, will have our enthusiastic support. Prior to last year's election that never was, my party promised that if we won that election we would ensure that payments reached the victims within three months of our taking office. Can the Minister confirm that these payments will be made as soon as possible, and certainly within that time scale?
	We welcome the parts of the Bill that tackle deregulation or simplification—they will have our broad support, as we have already made plain. However, the plain fact is that the future of traditional defined benefit schemes is hanging in the balance—a point well made by my hon. Friend the Member for Ryedale (Mr. Greenway). This may be the last chance to remove as many as possible of the disincentives to good employers who want to keep those schemes open in the future. We think, with respect, that Ministers are being too timid, and we shall table amendments that have the support of organisations such as the Association of Consulting Actuaries so that we can take matters further. I hope that Ministers will give those amendments serious and sober consideration.
	The main reason why we will not support the Bill in the Lobby tonight is that Ministers are still clearly in total denial about the potentially damaging effects of means-testing—an issue touched on by the right hon. Member for Birkenhead and others. At least the Secretary of State, judging by his press release, now accepts what he calls the "downsides", but how can he say that those downsides
	"far outweigh the small risk of saving and later regretting it"?
	I am sorry, but I do not agree with the hon. Member for Broxtowe (Dr. Palmer), who talked about a safety net and means-testing simply being there in case something goes horribly wrong. We are talking about means-testing that is already affecting nearly half of people as they retire. The Pensions Policy Institute and others have set out some genuine concerns that go to the very heart of these proposals, but the Government are the only organisation in a position to model the likely effects and to come up with detailed proposals to avoid disaster. All Ministers seem to be able to do is come up with bland assertions that it will be all right on the night. They are sitting on their hands and hoping that the problem will go away.
	The situation is worse than that. In recent weeks, Ministers have tried to shut down any debate on the issue. They have tried to bully the Opposition and even third parties into silence on this crucial point. It has been put like this: the Tories are letting the side down and making party political points for the sake of it, whereas what matters is the majority of people who should be better off with personal accounts.  [ Interruption. ] I have that more or less right, I think, judging by the reaction on the Government Benches. However, that is simply not good enough. If Ministers wish for consensus only on their own terms, they have come to the wrong shop. We are interested in consensus only if our concerns and those of other people are listened to and taken seriously. That point was also taken up by the hon. Member for Inverness and other places, all of which seem to have a distillery—the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander).
	If consensus merely delivers ill-thought-out and poorly designed solutions to the pensions crisis, it is a force for ill and not for good. In its usual painstaking way, the Pensions Policy Institute has identified at-risk groups—people who will be no better off and may be worse off if they are auto-enrolled into personal accounts. However, the institute cannot tell us how many people are likely to be affected. The Government could tell us if they wanted to. They have the model, the manpower and the means. However, they seem to be doing nothing. That issue was touched on, I think, by the hon. Member for Birmingham, Northfield (Richard Burden).
	Can the Minister for Pensions Reform tell us what modelling, if any, his Department has done, is doing and intends to do on this subject? How many people does he think are likely to be in the at risk groups—thousands, hundreds of thousands or even millions? Surely he has some idea. His answer may be that he and those advising him have not given it much thought, but I must tell him that the issue will not go away. That point was made by my hon. Friend the Member for Beverley and Holderness (Mr. Stuart). The subject will be written about by journalists, raised by financial advisers and used by unscrupulous employers who wish to induce their employees to opt out. I can assure the Minister that the official Opposition will not let it drop—not because we wish to make life gratuitously difficult for Ministers, but because we are genuinely concerned, as are many interested third party organisations, that the problem, if it is not addressed, will undermine the success of personal accounts.

Angus MacNeil: Will the hon. Gentleman give way?

Nigel Waterson: I am sorry, but I do not have time.
	I can tell the Minister that my colleagues and I are already working with independent bodies and the House of Commons Library to try to find the answers to those important questions. We will do that in parallel with the passage of the Bill. The process will no doubt be more laborious and will take longer than if the Department was doing it itself. If it will not, we will. Perhaps there is another more selfish motive for our attitude. We do not wish to inherit the problems in government. We wish to be the ones who implement a system of personal accounts that is designed to succeed and not set up to fail. To misquote Marks and Spencer, that is because there is no plan B.

Mike O'Brien: Let me begin by saying that I will take no lessons from the party that introduced pensions holidays for employers and the 1986 Lawson cap on surpluses that saw a drop in contributions. The Conservative party was responsible for the mis-selling scandal, the inadequate Pensions Act 1995, the so-called minimum funding requirement introduced by the right hon. Member for Richmond, Yorks (Mr. Hague) after the Maxwell scandal, and the 2.7 million pensioners left in poverty, some living on as little as £69 per week. Those who had a private pension had their benefits taken from them, pound for pound—a situation unlike that under this Government, who introduced the savings credit. The Conservative party also removed the earnings link. A little more humility from Conservative Members is therefore necessary.
	Having got that off my chest, let me say that the debate has been broadly good. Despite the usual knockabout, there has been a fair amount of consensus. There were strong contributions from my hon. Friends the Members for Broxtowe (Dr. Palmer), for Birmingham, Northfield (Richard Burden), for Grantham and Stamford (Mr. Davies), for Aberdeen, South (Miss Begg), for Nottingham, South (Alan Simpson), for Leyton and Wanstead (Harry Cohen) and for Northampton, North (Ms Keeble), from the hon. Members for East Londonderry (Mr. Campbell) and for Caernarfon (Hywel Williams) and from my right hon. Friend the Member for Birkenhead (Mr. Field). The hon. Member for Northavon (Steve Webb), who is, I suspect, even more of an anorak than I am about pensions, made an especially lively contribution. He appears to be following the great tradition of Gladstonian Liberalism in seeking fallen women, albeit only those who have fallen behind with their national insurance contributions. He deserves much credit for that.
	We heard some more critical but considered contributions from the hon. Members for Castle Point (Bob Spink) and for Ryedale (Mr. Greenway), as well as a series of interventions from many others, some of which were more helpful than others. I do not have time to deal with all the points that were made but I hope to be able to tackle many of them in Committee.
	One of the key issues in the debate was: will it pay to save? It was raised by Conservative and Liberal Democrat Front Benchers as well as the hon. Member for Ryedale and my hon. Friend the Member for Nottingham, South. It is a genuine and important matter, but the potential solutions are far from easy and often expensive. I am happy to discuss them in detail in Committee. However, the difficulties of resolving the issue should not undermine the need to support the Bill, promote personal responsibility, build confidence in pensions and be fair to the taxpayer in the process.
	For most people, the downside of not saving far outweighs the risk of saving and later regretting it. Some people will find that their lives did not turn out in the way they expected. Some people who saved for a pension end up on pension credit.

Angus MacNeil: Are not we in danger of setting up a monopoly with the personal accounts delivery authority? If contributors find a better product elsewhere, how easy will it be for them to transfer? Will they be stuck with the monopoly that has been established?

Mike O'Brien: The personal accounts delivery authority is there for development. The hon. Member for Epsom and Ewell (Chris Grayling) was wrong about it. The PADA will not become the organisation that delivers personal accounts. That will be done by the personal accounts board, which is a follow-on organisation.  [Interruption.] The hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) is signalling—I have no idea what about, so perhaps he had better intervene again.

Angus MacNeil: Regardless of whether there is to be yet another body, which could be a monopoly behind a monopoly behind a monopoly, what sort of competition will there be to achieve the best return for the investor?

Mike O'Brien: There will be widespread competition with the private sector—those who currently provide various schemes. We hope that they will continue to do that. The idea of personal accounts is that they will complement rather than compete with current provision. We want the current provision to stay and we expect many people who benefit from automatic enrolment to be automatically enrolled not into personal accounts but into the private pension scheme that the employer is currently running.

Chris Grayling: The Minister obviously did not hear me correctly because I referred to the delivery authority and its successor body. Will he assure the House that there will be a constructive debate in Committee on the amount of prescription that should appear in the Bill about the remit of the two bodies to ensure that there is no mission creep in the years ahead?

Mike O'Brien: Of course, there will be a debate in Committee and I am sure that we will have a substantial opportunity to consider all the issues. I look forward to that.
	Let me deal with one of the hon. Gentleman's key points, which was whether it will pay to save. People will face health and employment problems—the sort of risks that we all face in our daily lives. It is vital that, if those problems arise, and people retire without adequate provision, there is a state safety net for them. Most people should still be encouraged to save, which is what the Pensions Commission recommended and what we are seeking to encourage as part of the process of pension reform. By disproportionately focusing on those people who might get low returns because of health or employment problems, we need to avoid creating a problem by which those who would benefit from saving lose out. We therefore need to be careful about how the debate is developed. We should ensure that those who could benefit substantially from years of employer contributions and investment returns are enabled to do so, and we should not encourage people to gamble on what benefit levels will remain in place for the next 20, 30 or 40 years.
	The hon. Member for Epsom and Ewell has been very vocal on the issue, and he has gone to great lengths to try to rewrite Conservative social philosophy. He told the BBC that the state should give an explicit guarantee to those who save, which is an innovative idea. He has asked me to welcome innovative ideas, and I am certainly interested in that idea, which I want to discuss because it seems to undermine the idea of individual responsibility. It would create an administrative nightmare, and it would probably create a nightmare for the hon. Member for Tatton (Mr. Osborne), who would have to find the money to fund it. Where would he find that money?
	Let us look at the detail of what the hon. Member for Epsom and Ewell has said. He wants to create a
	"mechanism that would allow people to retrieve contributions".
	What does he mean by that? Let us explore the idea. Is he saying that he wants only those in personal accounts "to retrieve contributions", or will that apply to every pension scheme now and in the future? Or is he saying that all private pension schemes should make provision to repay premiums to anyone who gets less than pension credit levels?
	Is the hon. Member for Epsom and Ewell saying that pension schemes with automatic enrolment should have to repay the premiums? That is what he seems to be saying. Today, one in six people are automatically enrolled—they work for companies such as Tesco. Some of them will retire, and some of them will be on pension credit. Is he saying that those pension schemes must repay those premiums? Or is he saying that the retrieval mechanism would apply only to personal accounts, in which case would that not give personal accounts a competitive advantage against private schemes by providing a state guarantee? That would be an extraordinary step for the Conservatives to take. I am sure that the pensions industry would not be terribly impressed by those proposals, which would mean that it would have to repay anyone who is on pension credit. If he were in government, he would have to come up with a plan to pay the extra funding for all the people who would have to claim extra pension credit. It is an ill-thought-out proposal.

Chris Grayling: I simply ask the Minister what he is going to do.

Mike O'Brien: I have set out the various problems arising from the various proposals in a number of speeches. It has been suggested that we should increase trivial commutation, which would be very expensive and likely to lead to some wealthy people using it as a way to avoid taxation. A further option would be to deal with the issue by having a disregard, which has been proposed by the Pensions Policy Institute, but the cost would be enormous at more than £600 million. If it were to apply only to personal accounts, the cost would still be substantial, and applying it across the board to other sorts of pension schemes would be enormously expensive.
	We could mess about with the tapers on various benefits. There are various different costings, all of which are substantial, and it would increase means-testing. The various obvious options do not provide the answers. The hon. Member for Epsom and Ewell has asked me what we are doing about it. I am happy to discuss with him and with others ways in which we can deal with the issue, but coming up with proposals such as he has and suggesting that because there is a problem there is therefore a magic bullet solution is not worthy of him. That is not a constructive approach for the Conservatives to take, and using it as an excuse not to introduce any proposals is not acceptable. I listened with growing incredulity to the comments I heard about—

Danny Alexander: Will the Minister give way?

Mike O'Brien: Let me just finish dealing with the hon. Member for Epsom and Ewell; I may then deal with the hon. Gentleman.
	The hon. Member for Epsom and Ewell and his colleagues kept talking about the Government's models. The Government do have a computer system that forecasts pensioner incomes up to 2050, but it has taken on almost mythic status in the interventions we have heard from the Opposition during the course of the debate. They told us that they cannot come up with any proposals because they do not have access to the computer. Our system is one of a range of models we use to tell us how people might end up in 2050 with regard to pension credit. It does not model behavioural changes arising from policy decisions and, to the best of my knowledge, the Pensions Policy Institute one does not either.
	My predecessor, my right hon. Friend the Member for Stalybridge and Hyde (James Purnell), discussed making the Department's models available to the Opposition so that they could model their proposals, and neither party has taken us up on that offer. The Opposition can make their proposals; we are happy to run them through the system. They could see the results and so could we.

Nigel Waterson: I happened to be involved in those discussions, although, in fairness, the hon. and learned Gentleman was not in his current post at the time. The conditions that the Government sought to impose for any access to the Pensim 2 model were so burdensome and outrageous that there was no basis on which any sensible Opposition party could accept them.

Mike O'Brien: I make the offer, and the Opposition will not accept it. They always come up with excuses. We have said to them constantly, "Come up with your proposals. If you say that there is a problem here and that you are not going to vote against the Bill because of it, what are your proposals for dealing with it?" The Opposition come up with nothing at all. I am happy to have a debate on the issue, but we must be realistic. We should not start scaring people just for the sake of what is basically opportunistic point-scoring. We need an end to that.
	Just before Christmas, I met a group of pensioners who were among the 140,000 investors whose private pension schemes had failed, and I was able to tell them that the Government had put together a package that would deliver a just settlement for them. I am grateful for the kind words that have been expressed to me and my right hon. Friend the Secretary of State, but they should also be expressed to the Prime Minister and the Chancellor for bringing forward a settlement to deal with that problem.
	The settlement generated a flurry of publicity, but we must not lose sight of the fact that it was part of a larger package of Government proposals that seek to renew confidence and faith in our pensions system—confidence and faith that was rattled by the previous Conservative Government. Today, by contrast, quietly and without controversy, we are carrying out massive social reform of pensions that will benefit tens of millions of people. The Bill is only a part of it. Our reforms address the real issues that face this country: a major demographic change with people living longer; a lack of saving to pay for it; confidence in the pension system; the move away from final salary schemes; and pensioner poverty itself. The Government have recognised those problems and are making one of the biggest changes to pensions in years.
	We are reforming for the long term. We have put in place the pensions regulator, the Pension Protection Fund and proposals that address the issue of pensioner poverty. We have lifted more than a million pensioners out of relative poverty. The Bill will be another major reform that will tackle undersaving and give people who work the opportunity to save in a pension scheme. About 60 per cent. of the work force are not saving enough for their retirement. This major Bill will enable many of them to do so, and ensure that people on low and middle incomes are given many of the benefits that were available only to those who were richer.
	This is a quietly done, but important and major piece of social reform. It is part of a wider package of reforms that we are undertaking. As part of those reforms, we aim, in the Pensions Act 2007 and other legislation, to renew confidence in Britain's pensions. I look forward to a responsible debate, and to genuine and effective consensus for lasting change. We will keep our eyes on the prize: up to 9 million people saving more for the first time, and £10 billion more being saved. I commend the Bill to the House.
	 Question put and agreed to.
	 Bill accordingly read a Second Time.

PENSIONS BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(7) (Programme motions),
	That the following provisions shall apply to the Pensions Bill:
	 Committal
	The Bill shall be committed to a Public Bill Committee.
	 Proceedings in Public Bill Committee
	2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 26th February 2008.
	3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
	 Consideration and Third Reading
	4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
	 Other proceedings
	7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed. —[Ms Diana R. Johnson.]
	 Question agreed to.

PENSIONS BILL  [MONEY]

Queen's recommendation having been signified—
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
	That, for the purposes of any Act resulting from the Pensions Bill, it is expedient to authorise the payment out of money provided by Parliament of—
	(a) any expenditure incurred by the Secretary of State or a government department in consequence of the Act, and
	(b) any increase attributable to the Act in the sums payable out of money so provided under any other enactment.— [Ms Diana R. Johnson.]
	 Question agreed to.

PENSIONS BILL  [WAYS AND MEANS]

Motion made, and Questions put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
	That, for the purposes of any Act resulting from the Pensions Bill, it is expedient to authorise the payment of sums into the Consolidated Fund.— [Ms Diana R. Johnson.]
	 Question agreed to.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Immigration

That the draft Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) Order 2007, which was laid before this House on 22nd November, be approved.— [Ms Diana R. Johnson.]
	 Question agreed to.

PETITIONS

Post Office Closures (Kettering)

Philip Hollobone: I have the honour of presenting to the House a petition signed by local people in Kettering protesting at the closure of the Hawthorn road post office, which is a busy, popular and profitable branch of Post Office Ltd.
	The petition reads as follows:
	The Humble Petition of Councillor Larry Henson and 2,748 others of like disposition sheweth
	That Post Office Ltd. proposes to close the Hawthorn Road Post Office in Kettering, which is a long-standing, popular and profitable local Post Office branch used by thousands of local people, many of whom are elderly, young mothers with children and those with disabilities, who would find it inconvenient and difficult to reach any other branch of the Post Office.
	Wherefore your Petitioners pray that your Honourable House urges Her Majesty's Department for Business, Enterprise and Regulatory Reform to call upon Post Office Ltd. to reconsider its closure proposals and ensure that the Hawthorn Road Post Office in Kettering remains open and part of the national Post Office network.
	And your Petitioners, as in duty bound, will ever pray, etc.
	[P000101]

Support for Armed Forces

Bob Spink: We have the bravest and the best servicemen and women in the world. That is why there is so much support for them from our constituents. I am extremely proud of the work that our forces have done, including by veterans over many years, to make the world a safer and more stable place. People are particularly concerned about those who are sent to serve their country in the most difficult places, such as Iraq and Afghanistan. The petition is signed by 1,000 people and calls on the Government to ensure that our troops are provided with the correct equipment while they are serving and given a better deal when they return to this country. David Cain of Canvey island, excellent members of the local branches the Royal British Legion and many other constituents are deeply concerned about this issue.
	The petition states:
	The Petition of Residents of Castle Point and others,
	Declares that members of HM Armed Forces in Iraq and Afghanistan are fighting and dying, and that they lack basic equipment to do their job and there is insufficient appreciation and support from the Government for them and their families, particularly when they return from active service, and, in welcoming the provision of limited free postage, feel that the Government should go much further to give help and recognition.
	The Petitioners therefore request that the House of Commons urges the Government to adopt more generous policies for serving and returning members of HM Armed Forces, and to give them priority in housing, in recognition of the contribution made by these brave men and women.
	And the Petitioners remain, etc.
	[P000102]

FLOODING (GLOUCESTERSHIRE)

Motion made, and Question proposed, That this House do now adjourn. —[Steve McCabe.]

Laurence Robertson: I am pleased to have secured my second debate on flooding. I thank you for awarding it to me, Mr. Speaker, and I thank the Minister for remaining behind to reply to it. I know that he has been extremely active on the issue of flooding. I am also glad to see other hon. Members here, including my hon. Friend the Member for Forest of Dean (Mr. Harper).
	A number of people have asked me, "If you held a debate on this issue in October, why are you holding another one today?" The reason is quite simple: to keep the issue on the agenda. Two inquiries are under way, one by the Department for Environment, Food and Rural Affairs and one by the Government. However, it is important to keep reminding people that there are many in Tewkesbury—I shall talk about Tewkesbury, but I know that other areas have been affected, too—who continue to suffer from the effects of the flooding, which happened some months ago. Although the emergency passed long ago, the problems remain.
	One of the biggest remaining problems is the fact that many people—567, according to an estimate by Tewkesbury borough council—are still displaced from their homes. Many are living in caravans, and throughout Christmas many had to live in cold, cramped conditions on the drives of their homes. Some have been able to use the upper floors of their houses, but it has been a very uncomfortable time for them. While the rest of us may have enjoyed some comforts over Christmas, they have been suffering.
	Many people whose homes were devastated are back in them now. It seems to depend on the speed at which loss adjusters and builders have worked. I do not mean to suggest that some builders have been working slowly, but families who know, live near or are related to builders have tended to get the work done much more quickly than those who made arrangements through insurance companies. I make no criticism of the companies concerned—it is just a very slow system—but when they have allocated builders, the process has taken some time. It has been a very uncomfortable period for many of my constituents, and it may be months before those displaced from their homes can return to them.
	I pay tribute to those people. I visited as many as I could before Christmas, and their spirit was incredible. Virtually all those who were living in caravans and would be in them over Christmas took the time to wish me a happy Christmas, although their own season had been so disrupted. Old people, young people, people who were ill, people who were healthy, children—a very mixed bag—were concerned enough to wish me a happy Christmas. That says something about the people of Tewkesbury.

Mark Harper: Thankfully, in my constituency far fewer people—about 41 families—were still in temporary accommodation over Christmas, but does my hon. Friend agree that the best Christmas present we could give all these people is to look carefully at the lessons from the inquiries that are conducted, in order to ensure that this is the last time a significant number of families are prevented from living at home over Christmas and that it never happens to anyone again?

Laurence Robertson: My hon. Friend is right. The main thing that most of my constituents want is for lessons to be learnt. They accept that we live on a floodplain and that we often see water on the fields, but they do not accept that things need be quite as bad as they were. We must learn those lessons.
	As people work towards returning to their homes, their great fear is that the floods could come again. In his report, to which I shall return in a moment, Sir Michael Pitt described the fear that existed at the time of the floods. Now there is a different fear: what if it happens again? I do not think we can assume that this was a one-in-150-years flood. We do not know whether it was or not. Heaven forbid, it could happen again next week or next year. In the House we often discuss the problems caused by climate change, but I think we should take account of the fact that the same amount of rain could fall again at any time. We hope that it will not, but we really do not know.
	People are living in fear, and although I have tried to establish contact with as many of them as possible—I have placed advertisements in newspapers and written to people—it is difficult to reach everyone. Despite all the activity going on around them, people feel alone. One thing that worries them is insurance for the future. Many face increased premiums, some cannot obtain insurance cover at all, and some are being told by insurance companies "If you want flood cover, there will be a very large excess on your policy". One lady told me—and I think this is fairly typical—that the insurance company had said there would be a £10,000 excess on her buildings insurance and a further £10,000 excess on insurance for furniture and other items. Effectively, that person has no insurance. If it floods again, it will cost her at least £20,000 out of her own pocket. We may be in a position perhaps to criticise people who were not insured last time, but what about now? People cannot get insurance. The Association of British Insurers said:
	"We continue to decline a request for new cover for a property which has recently flooded unless the property has already been reinstated and where we are supplied with details of the flooding, what caused the flood, what the cost of the damage was and—
	crucially—
	"what action has been taken to avoid any future event."
	Surely that is beyond the control of the householder. It is not the Minister's fault either, but I would like to ask him if he has any idea of what can be done in this respect.
	Another problem is that business is down, particularly in the town of Tewkesbury. It has been a bit depressed for a while—more than it ought to be—but businesses are struggling to come to terms with what has happened. There was a tremendous loss of trade at the time, but it has not picked up as we hoped it would. I would welcome any suggestions that the Minister may have, but I want to say publicly that Tewkesbury is open for business. It is working and still open. As I have said, it did not end up like New Orleans sadly ended up. I hope that people will continue to come to Tewkesbury.
	One of the problems is identifying who is responsible for which ditch, which drain and which culvert. Is it the Environment Agency, the Highways Agency, British Waterways, the county council, the borough councils or the riparian owner? It is very difficult. Once an organisation accepts responsibility, it then must put the job right, which, of course, costs money.
	I wrote to the Minister on 15 November specifying projects that needed completion. I shall return to those in a moment, but on the issues of drains, ditches, sewers and culverts, we have had heavy rain in some parts of the country, which has brought the problems to light. I wonder what state the ditches and drains are in throughout the country. We simply do not know. I am pleased that Sir Michael Pitt's report has highlighted that as an important issue.
	We have a problem at Prestbury, where houses where people have lived without flooding for 40 years flooded in June. The culverts were not joined up and a tree fell on another culvert. The tree was listed and the owner did not want it to be felled, so the problems go on. The problem now is that, some months on, the Environment Agency is saying that it wants the whole cost to be reassessed. There will be a further delay in fixing the culverts in an area where 500 homes remain at risk.
	There is a problem with the bridge at Bredon road, which was cut off during the floods, causing the town of Tewkesbury to be isolated. The bridge has been repaired, but at low cost. I do not think that it would withstand future flooding. Planning permission has been sought for a further 105 homes further up the road, close to the bridge. Those houses would connect to the main sewers, which might not have the capacity to cope. What are the planning requirements with regard to drains? Who is responsible for the ongoing maintenance? Again, Sir Michael Pitt's report asks those questions.
	In Uckington, gardens collapsed into the river Chelt and one person at least is still awaiting answers from the Environment Agency about what can be done to rectify matters.

David Drew: Does the hon. Gentleman agree that we in Gloucestershire need prioritisation by the Environment Agency in looking at some of the issues that he has addressed and the two or three issues that I have asked the agency to look at? That is the very least that the Minister should take from the debate.

Laurence Robertson: The hon. Gentleman is right, and I would go further as I have before on a number of issues. The Environment Agency, as it is formulated, is not up to the job. It either needs more responsibilities and powers, and perhaps more money, or it deserves to be scrapped. I really do not think that it serves a useful purpose as it stands. I again appeal to the Minister that something be done about it.
	We have also had a problem with maps. The flood risk maps did not correspond to the floods we actually had—and Sir Michael Pitt referred to the fact that flood risk maps for surface water did not exist at all. This raises a question: if the maps do not correspond to the actual flooding we are having, should they be used to determine where houses can be built? I want to return to that, although I realise that I do not have as much time in this debate as I had last year, so I shall have to hurry up a bit.
	I want services to be protected. It is good that Mythe water treatment works and Walham substation are now protected by Hesco bastions, but they are semi-permanent, and permanent measures are definitely needed. Alternative networked supplies are also needed.
	On money, if Tewkesbury borough council wanted, for example, to spend a little more on flood relief, would it be allowed to go over the capping limit? I do not know the answer to that, and I wonder whether the Minister might be able to help. I am pleased that the Government have secured about £100 million from the solidarity fund, but I would like to know how that money will be distributed and used.
	Turning to Sir Michael Pitt's interim report, I am meeting him on 23 January and I will raise some of the following issues with him, but it will be useful to run through them briefly now. The report raises a number of good points, particularly with regard to drains, ditches, sewers, surface water and agencies' responsibilities. For example, he says that
	"the automatic right to connect surface water drainage of new developments to the sewerage system should be removed".
	That is a useful suggestion.
	Sir Michael acknowledges, however, that it is an interim report. He says that more information is needed, and in a bid to help in that process I wish to make a couple of comments. Some of the interim suggestions are a little general. There is a lot of talk about strategies, assessments and guidances, and I hope that they can be worked up into more direct proposals for action. I also think that there is too much emphasis on homeowners doing work to protect against floods, which has caused a little offence in Tewkesbury. Sir Michael suggests that instead of being set against the floor, plugs should be mounted higher up on walls. That is fine, but one cannot move cookers right to the ceiling; there are obviously certain limitations on what can be done.
	The Department for Environment, Food and Rural Affairs suggests that it would cost between £3,000 and £10,000 to protect each home. People do not have that sort of money to spend. On that point, I understand that the Environment Agency has just taken away the £20,000 donation it makes to the National Flood Forum, which is unfortunate. That group is a charity; it advises people on flooding—and it suggests steps that Sir Michael's report also suggests.
	There has been a little too much emphasis on what individuals can do. That is not the main point. There is not enough emphasis at present on what the Government's role should be in preventing house building on or near floodplains. Sir Michael says:
	"No new building should be allowed in flood risk areas that is not flood resilient".
	To say that such houses must be resilient rather misses the point. There used to be green fields that soaked up water. If they are built on, that water goes elsewhere and causes a problem. Sir Michael was quoted—I do not know how accurately—in the  Gloucestershire Echo as saying that there is no point in recommending no building in these areas as the Government would not listen. That weakens the recommendation. That is far too weak, and it does not appear to be too impartial or too independent. The point about where houses are built is the one that people make most frequently. People strongly feel that we should not have more houses on floodplains or even in areas close to floodplains.
	To summarise, my recommendations are clear and they are the same as those I made a few months ago. There should be no building on or near floodplains. We need to clear out the ditches and the drains. We need to repair sewers and culverts. We need to create one body that is powerful and that is responsible for all this work and for flood prevention and defences. We need to identify vulnerable people and buildings and to create a list of them, so that they can be helped first should such a situation arise again. We need to protect the water and electricity works and to network the supplies, and we of course need to improve the defences as far as possible.
	As I said, Sir Michael's report is an interim one and I hope that we can move it on to become an even stronger report. I hope, too, that the Government will take account of the recommendations in it and of the recommendations that those of us who have to live in these areas—who have the pleasure of living in these areas, but who have suffered recently—will make.

John Healey: I start by congratulating the hon. Member for Tewkesbury (Mr. Robertson) on securing this debate and on his determination, as he said tonight, to keep this matter on the agenda. He is absolutely right to do so, because although he is right to say that the flood waters have long gone in the areas affected by the summer floods, many of the households, businesses and communities that have experienced problems in trying to get back to normal still have not done so. As Minister responsible for co-ordinating Government support for the recovery efforts, one of my principal tasks is to make sure that we give local councils leading those recovery efforts and providing that support the help and back-up that they need.
	The hon. Gentleman said that he wanted to make sure that the Government are aware of the continuing problems that people face and the continuing pressure that councils are dealing with through this recovery period. I pay tribute to him—he has done that consistently since July, as has the hon. Member for Forest of Dean (Mr. Harper), who has now left the Chamber, and my hon. Friend the Member for Stroud (Mr. Drew). They have been consistent not just in their participation in the tele-conferences that I and my colleague Ministers ran throughout the summer recess, but in their attendance of meetings held by Ministers. As the hon. Member for Tewkesbury said, he had a similar debate in October. Essentially, such efforts have ensured that Ministers have information first hand, direct from Members of this House, about the pressures that people are under, the challenges that they face and the support that councils and communities are rightly looking for the Government to offer.
	The hon. Gentleman said that in future we might need to be prepared for events such as those that occurred in the summer happening more often. During that summer, we were certainly faced with severe, prolonged and unprecedented levels of rainfall that in many areas simply overwhelmed the drainage systems, flood defences and rivers. That rainfall resulted in severe damage to many properties. We estimate that during the two episodes of flooding in June and July, some 48,000 homes were flooded. Not just the gardens, outhouses or garages were flooded; there was water in 48,000 properties. Of course, the June flooding was mainly in South Yorkshire and Humberside, although there were pockets of flooding in the hon. Gentleman's county of Gloucestershire.
	Let me give the House an indication of the scale and severity of that rainfall. On 20 July, when the rainfall occurred that caused the problems in the hon. Gentleman's constituency, Gloucester received in one day one and a half times the average rainfall for the whole of July. Upstream at Worcester on the River Severn and at Evesham on the River Avon, the equivalent of two months' rain fell in just one day. In Gloucestershire, approximately 4,000 homes and more than 500 businesses were flooded. Many other households and businesses were of course affected by the flooding of the Mythe water treatment works, which meant that some 350,000 people in the county went without water for some time. I pay tribute to the heroic efforts of the emergency services and local councils in protecting Walham. As I saw for myself when I paid a visit on 24 July, we came very close, had that sub-station been knocked out, to seeing a power failure not just in Gloucestershire, but potentially in large parts of south Wales as well.
	The hon. Gentleman spoke of the strength of community spirit and the generosity shown in the way that neighbours were looking out for each other—they continue to do so—and I reinforce that point, because that has been my experience. On 24 July, when I first visited Tewkesbury, I went to the town centre and was met by Police Inspector Brian Murnaghan, who was overseeing the distribution of bottled water. Sports centre staff were helping to distribute the water, and people such as the constituent whom the hon. Gentleman nominated for the local heroes reception were making sure that their housebound elderly neighbours got the water that they needed. Inspector Murnaghan was finishing off a 10-hour duty overseeing that operation in Tewkesbury town centre, and in the course of our conversation he told me that his home had also been flooded out.
	The mayor of Tewkesbury, Councillor Phil Awford, gave up a good deal of his time to show me around Tewkesbury. He is a renowned and rightly respected campaigner as part of the National Flood Forum, but he said to me on that day, "Truth be told, nothing could have protected us from the scale of the rainfall that we faced in Gloucestershire at that time."
	My aim as the Minister responsible for the flood recovery is to ensure that we co-ordinate and put in place the central Government effort to support the local recovery efforts. Along with fellow Ministers, I have tried to ensure that despite the fact that the flood waters have gone—the problems have not—constituencies such as those of the hon. Gentleman and my hon. Friend the Member for Stroud are not forgotten. Indeed, 22 ministerial visits have been made to Gloucestershire since the summer, not least those made by the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Gloucester (Mr. Dhanda), who has played a great part in that programme. It is important that Ministers make such visits and it is important that Ministers at the centre of Government understand the challenges that are still being faced.
	I am glad that the funding so far to Gloucestershire stands at about £15 million—there will be more to come. The hon. Gentleman's area, Tewkesbury, has benefited greatly and has made good use of the flood recovery grant that we were able to put in place. We await any Bellwin application that his authority may wish to make. I visited Tewkesbury just before Christmas, on 17 December, when I met the chief executive and other leading figures of the town council. May I tell the hon. Gentleman that what happens in the future and what happens with planning applications was a concern raised by local representatives? I gave an undertaking then, which has been followed up by officials in my Department, that Government office officials and planning experts will set up a meeting in Tewkesbury—they have already written to Major Wilson, the town clerk, to get that under way—so that representatives from the local community and the council can discuss directly the sort of points that he is concerned about for the long term.
	The hon. Gentleman mentioned the first successful application that the UK has made to the European solidarity fund. I had a meeting in Brussels with Commissioner Hubner on 31 October, and she has since persuaded the European Commission to agree to proposals that mean that we should receive additional aid to contribute to the costs of dealing with the flood recovery in Britain. We are working through the terms on which that money can be spent with the Commission, and I hope before long to be able to settle that matter. It will probably be some time before Easter when we finally receive that money—that is the sort of time scale and pace at which the Commission's programme operates; nevertheless, that is an additional resource from the special fund set up to help countries such as our own, which have been hit by serious national events like these.
	The hon. Gentleman rightly raised the issue of those who are still not back in their home. One of the most distressing aspects of the flooding has been the impact on families and households. Based on the work of local authorities in Gloucestershire, we estimate that about 1,250 households are still not fully back in their homes. Around 250 of those are staying in caravan accommodation. When I visited the hon. Gentleman's constituency on 17 December, I met Mrs. Julie Irwin. Her family, including three children, are able to sleep in their house, but are otherwise living in a caravan. The oven in the caravan is too small for the Christmas turkey, which is an example of the stresses, many of which are hidden, on such families, who are still struggling. I pay tribute to Mrs. Irwin for the way in which she has coped, and to her son, who suggested to Gloucestershire county council that children from families who are not back in their home should be entitled to free school meals. The council has now put that suggestion into practice.
	That visit was one of the reasons why I was pleased to be able to announce just before Christmas that I would make available an extra £1 million to the small number of authorities that have a large number of households that are still not back in their own home. We are consulting with local authorities about how to distribute those funds, and I hope to make an announcement shortly. That decision followed an important meeting that I had with the local authorities and the insurers, in which the authorities undertook to improve communications with those households not back in their own home and to assess the needs of those living in caravans better to understand the pressures of the onset of winter. For my part, I undertook to step up the advice available from the Government to deal with homelessness problems, and I have now made the extra money available.
	On the question of the insurers, my hon. Friend the Minister for the Environment was in his place on the Front Bench when the hon. Gentleman made the point about the lady from his constituency who faced prohibitive premiums. We would be interested in the details because we are keen to hold the ABI to the reassurances that it has given that no areas have been blacklisted for insurance, that existing cover has not been withdrawn in any area, and that there is no evidence of policy renewals being refused.
	The hon. Gentleman is right to draw attention to the need to learn lessons. The first report by the Pitt review was important and we have accepted the 15 urgent recommendations. There will be consultation on those and others over the next three months. It is clear that we need to improve Government emergency procedures; to improve surface water management; and to review the role of fire and rescue services during floods. We will do that.
	The local reviews, such as those led by—
	 The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at Twenty-seven minutes to Eleven o'clock